Food products on sale at a supermarket in Beijing. The government has taken measures to boost domestic consumption to help stabilize economic growth. China is likely to have replaced Japan as the second-largest economy in the world. Da Wei / for China Daily

Inflation still a big concern for policymakers, analysts say

China's gross domestic product (GDP) growth jumped 10.3 percent year-on-year last year, boosted by a faster-than-expected 9.8 percent expansion in the fourth quarter, the National Bureau of Statistics said on Jan 20.

At the same time, the nation is likely to have replaced Japan as the second-largest economy in the world. Top Chinese officials and analysts, however, are of the view that the nation still lags Japan in terms of the per capita GDP.

The statistics bureau said China's GDP hit 39.8 trillion yuan (4.49 trillion euros). Japan is expected to officially release its figures for 2010 growth on Feb 14.

China is believed to have overtaken Japan in nominal GDP by the end of the second quarter of 2010 based on respective GDP figures. Factors such as the exchange rate could influence the final outcome of such a comparison.

Ma Jiantang, chief of the statistics bureau, did not compare the overall sizes of the two economies, but said China's per capita GDP lags behind that of Japan.

Per capita GDP in China was about $4,412 (3,281 euros), compared to $42,431 in Japan, according to calculations by the Nikkei newspaper based on data compiled by Daiwa Institute of Research and the International Monetary Fund.

A World Bank report also said China's per capita GDP is one -tenth of Japan's and the per capita income is similar to countries such as Algeria and Albania.

"China has a large population, a weak economic foundation, relatively lacking in resources if the huge population is taken into consideration and the number of poor people is very large," Ma said earlier.

"Therefore, we should have a sober understanding that China remains a developing nation."

China's fast economic growth has also led to problems like pollution, and some analysts have called for a restructuring of the growth pattern.

Ma of the statistics bureau said China's economy has recovered quickly from the fallouts of the global financial crisis.

"The national economy is generally faring well," Ma said.

"The GDP growth demonstrated that China has walked out the impact of the world economic crisis," said Yao Jingyuan, chief economist of the bureau.

China's GDP growth bounced back to two-digit growth in three years. In 2007, China's GDP growth was as high as 11.9 percent, the highest in the past decade. But one year later the figure dropped to 9.6 percent and then to 9.2 percent in 2009 as a result of the world financial crisis.

Fixed-asset investment reached 27.81 trillion yuan in 2010, up 23.8 percent compared to a year earlier, the statistics bureau said.

Premier Wen Jiabao said earlier that China will address "structural problems" and "we can rely on stimulating domestic demand to stabilize and further grow the Chinese economy".

To boost domestic demand, China will reform personal income tax, property tax, increase salaries and improve education, housing and social security. All of these measures are expected to encourage consumption.

While growth is no longer a major concern, analysts say the bigger concern is inflation.

The consumer price index , a main gauge of inflation, reached 3.3 percent last year, exceeding the pre-set target of 3 percent.

The People's Bank of China, the central bank, has increased the banks' reserve requirement ratio seven times and raised its benchmark interest rates twice since last year to curb inflation.

The central bank also confirmed that "price control is the top priority of this year's work", according to a statement on its website.

The Shanghai Composite Index, the country's main stock index, tumbled almost 3 percent on Jan 20 on concerns that rising inflation could lead to further tightening of monetary policy.

Bloomberg contributed to this story.