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UPDATED: November 19, 2010 NO. 47 NOVEMBER 25, 2010

MEASURES AGAINST INFLATION: Vendors prepare their vegetables for sale in Lianyungang, east coastal Jiangsu Province. The city has increased supplies to curb further vegetable price increases (WANG CHUN)

Numbers of the Week

340 billion kwh

China's power consumption in October rose 8.5 percent from a year ago to reach 340 billion kwh, said the China Electricity Council on November 16.

786 billion yuan

China's fiscal revenue in October rose 14.8 percent year on year to 786 billion yuan ($118.4 billion), said the Ministry of Finance.

TO THE POINT: For two straight quarters, China has replaced Japan as the world's second largest economy, but experts believe the Chinese economy is not without its flaws. The country remains a favorite destination for foreign investors as FDI pours in. China remains the largest foreign holder of U.S. Treasury securities. The auto market continues to burst with vitality as vehicle sales pick up across the nation. Chinese steelmakers are facing some serious headwinds as costs rise eats into their profits. PC giant Lenovo fares well, with quarterly profits soaring.


Big But Not Strong

For two consecutive quarters, China's GDP has climbed higher than that of Japan, making the Chinese economy the second largest in the world.

The Japanese Government on November 15 reported the country's GDP at $1.37 trillion in the third quarter, compared with China's $1.42 trillion. Japan still leads with $3.97 trillion for the January-September period. But if the current pace of growth continues, China is expected to surpass Japan for the entire year of 2010.

China's leap past Japan is a reflection of the former's economic boom in the past decades, said Guo Tianyong, Director of the Research Center of China's Banking Industry at the Central University of Finance and Economics.

However, this success is far from guaranteed since China's economy faces a number of problems, such as its over-reliance on investments and environmental pollution, he said.

Learning lessons from Japan, China should expand domestic demand and step up its clampdown on asset bubbles, said Guo.

China still has a long way to go toward prosperity as its per-capita GDP is only $3,800, ranking 108th in the world, said Zhao Xijun, Deputy Director of the Financial and Securities Institute at the Renmin University of China.

Meanwhile, efforts are also needed to bolster the country's technological expertise, innovation capacity, brand competitiveness and education, he said.

FDI Momentum

China has maintained its appeal to foreign investors despite a slowdown in the macroeconomy.

The country received $7.66 billion of foreign direct investment (FDI) in October, up 7.86 percent from a year ago, said the Ministry of Commerce (MOFCOM). This was the 15th consecutive month of growth.

The October figure brought the amount for the first 10 months of the year to $82 billion, surging 15.71 percent year on year. From January to October, a total of 21,181 foreign-funded companies were approved, an increase of 16.62 percent over the previous year.

As the Chinese economy takes off, many foreign investors have focused on the Chinese market, instead of exports back to their home countries, said Yao Jian, a MOFCOM spokesman on November 16.

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