China's gross domestic product grew 9.5 percent year-on-year to 3.1 trillion yuan (US$374.6 billion) during the first quarter of this year, the National Bureau of Statistics (NBS) reported on Wednesday.

Value-added of China's primary industry went up 4.6 percent year-on-year to 228.7 billion yuan (US$27.6 billion), while that of the secondary industry climbed 11.3 percent to 1.8 trillion yuan (US$217.5 billion). Value-added of tertiary industry rose 7.6 percent to reach 1.1 trillion yuan (US$132.9 billion).

Bureau spokesman Zheng Jingping said the figures marked a good start to the year.

However, Zhuang Jian, a senior economist with the Asian Development Bank, thought that first-quarter economic growth was "a little bit high" and suggested that the nation's economy has not yet achieved a soft landing.

"If the government does not take new measures, including a further rise in interest rates, the economy will show 9.5 percent growth for the whole year," he said.

The government has taken a raft of macro-control measures to cool the overheating economy since the second half of 2003, including lending limits on banks and bans on some new fixed-asset projects.

Last October, the People's Bank of China, the central bank, hiked interest rates for the first time in nine years, raising the benchmark lending rate by 0.27 percentage point to 5.58 percent.

Zhuang believes the bank has room to raise the rates further.

The consumer price index (CPI) rose 2.8 percent year-on-year during the first quarter, while the producer price index rose 5.6 percent. Analysts say that despite the relatively low figure, inflationary pressures continue to lurk.

Growth in fixed-asset investment for the first quarter was 22.8 percent year-on-year, down substantially from the figure of 43 percent for the first quarter last year.

Economist Niu Li of the State Information Center warned that first-quarter economic growth was greater than expected. "It will increase worries that the country's fixed asset investment might be rebounding," he said.

The investment in the real estate and steel sectors are most frequently cited as indicators of economic overheating.

The NBS forecasts continued growth in real estate investment, whose proportion of total investment nationwide climbed from 12 percent in 1998 to 20 percent in 2004.

NBS spokesman Zheng attributed the sector's rapid growth to brisk market demand and rising construction costs. The price index of China's fixed-asset investment grew 1.8 percent year-on-year in the first quarter after climbing 5.6 percent last year and 2.2 percent in 2003.

The State Council adopted in principle on Wednesday a policy for development of the iron and steel industry. Fixed-asset investment in the sector is already high, participants agreed, and the government must "rigidly control" it to avoid excessive expansion of the sector.

(China Daily, Xinhua News Agency April 21, 2005)