China's annual economic growth picked up to 10.2 percent in the first quarter, strengthening the case for measures to prevent overheating, possibly including a quicker rise in the yuan.
In confirming the gross domestic product rate disclosed at the weekend by President Hu Jintao, the National Bureau of Statistics expressed concern on Thursday over excessively loose credit and unbalanced growth, but said the overall outlook for the economy remained positive.
"First-quarter GDP growth looks a bit fast, but it is still reasonable," said the bureau's spokesman, Zheng Jingping.
"Current economic conditions and growth mean we can say we have the confidence, the means and the experience to properly use adjustment to keep within a suitable, stable and relatively rapid range," he told a news conference.
Zheng said the government needed to focus more on resource conservation, a better balance between urban and rural areas and stoking domestic consumption as a driver of growth.
"We should not blindly pursue economic growth regardless of the conditions," he said.
Economic growth picked up from the previous quarter, when GDP was 9.9 percent higher than a year earlier, and was powered by a pick-up in growth in investment in fixed assets such as factories and roads to 27.7 percent from 25.7 percent in all of 2005.
Zheng acknowledged the need to control credit, which has fuelled the investment boom and got policy-makers worried about overcapacity that could lead to a new crop of bad loans.
"In the initial stage it will boost economic growth, but it will also lead to inflationary pressure and structural problems, so the issue should arouse our attention," he said.
Economists said the data cemented the case for measures to rein in growth. Many tipped an increase in the proportion of deposits that banks are required to hold in reserve at the central bank - money that thus cannot be lent out.
The strong investment data also suggested local governments were continuing to defy Beijing's exhortations to cool growth by supporting construction projects in their areas, said Qu Hongbin, chief China economist with HSBC in Hong Kong.
Zheng, the bureau's spokesman, raised similar concerns.
Qu expects a 0.5 percentage point rise in banks' reserve requirements in the next few weeks.
China has kept the yuan on a tight leash since depegging it from the dollar last July and setting it free to float within managed bands. The currency stood at 8.012 per dollar on Thursday, a gain of just 1.22 percent in 9 months.
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