CHINA’S economy expanded 9.9 per cent last year, overtaking Britain and France to become the world’s fourth largest, while income per head for China’s 1.3 billion people increased to £120 a year to make its inhabitants richer than those of Morocco.

With the economy now valued at $2.25 trillion (£1.26 trillion), excluding inflation, the announcement from the National Bureau of Statistics puts China marginally ahead of the UK, at about $2.07 trillion, although the final order will depend on the exact figure for inflation throughout the UK economy last year.

What is not in doubt is that China will sweep well ahead of Britain during 2006, and it is only a matter of a few years before third-placed Germany is surpassed. Chen Xingdong, an economist at BNP Paribas in Beijing, said: “China will overtake Germany by 2008.”

Last year’s strong expansion followed growth of 10.1 per cent in 2004 and 10 per cent in 2003. Government measures to cool the economy such as credit curbs, tougher planning laws and a currency revaluation have made little impression. Stephen Green, an economist with Standard Chartered Bank in Shanghai, said: “All these things should slow the economy down. But as a supertanker, it’s got so much momentum behind it.”

Investment covering everything from apartments to art centres contributed a whopping 48.8 per cent of 2005 growth. Consumption, which the government is trying to stimulate, accounted for 33.3 per cent of the increase in GDP while trade made up 17.9 per cent.

Statistics bureau chief Li Deshui said action was needed to brake investment and avert the risks of overcapacity, which could lead to a fresh crop of bad loans, wasted resources, bankruptcies and rising unemployment. However, barring policy mishaps, China’s prospects were bright.

Given its population and the Communist Party’s ambition to transform China into an economic superpower, many analysts anticipate it will one day become the world’s top economy. The US in 2004 had the world’s biggest economy at $11.7 trillion, followed by Japan at $4.9 trillion according to figures from the International Monetary Fund.

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