China economy shows strong growth in 2009

China has said its economy expanded by 8.7% in 2009, exceeding even the government's own initial expectations.

The pace of change increased as the year went on, with growth in the final quarter of 2009 increasing by 10.7% from the same period a year earlier.

China is now on course to overtake Japan and become the world's second-biggest economy.

Japan announces its latest quarterly gross domestic product (GDP) figures next month.

The Japanese economy is likely to have contracted by about 6% in 2009.

'Right direction'

China's GDP announcement was made by Ma Jiantang, head of the National Bureau of Statistics.

He said China had faced "severe difficulties" in 2009, but its economy has now recovered and is moving in the right direction.

Annual growth was only slightly down on 2008.

These latest GDP figures have exceeded the target set by the Chinese government, the BBC's Chris Hogg in Shanghai says.

This is a turnaround because China, like other countries across the world, was hit by the economic crisis during late 2008 and early 2009. Factories closed and workers were laid off.

The economy recovered with the help of a massive government stimulus package but now there are signs it is expanding too quickly.

"There's very strong growth but there's real concern about the quality of the growth and what will happen when the stimulus is withdrawn," said Michael Pettis, professor of finance at Peking University.

In Pictures: China's economy

"It seems pretty clear that any withdrawal of the investment stimulus is going to have a big impact on growth."

Inflation is also picking up, with consumer prices increasing by 1.9% in December from a year earlier.

Chinese authorities are expected to now take measures to prevent the economy from overheating.

Economists expect interest rates to rise, while banks have already been ordered to keep more money in reserve, and reports say some have even been told to stop lending for the rest of January.

'China's reality'

But Mr Ma played down speculation that China's economy had now overtaken Japan's.

"According to the UN standard - that is $1 a day - there are still 150 million poor people in China. That is China's reality," he said.

"So despite the increase in our GDP and economic strength, we still have to recognise that China is still a developing country."

On inflation, he said that price rises were "mild and under control".

Predictions

Meanwhile, the World Bank has said that the global economic recovery will slow later this year as the impact of government stimulus policies wanes.

The Bank has forecast growth of 2.7% this year after a contraction in 2009.

However, its predictions for Japan are slightly less pessimistic than other forecasters. It estimates that Japan's economy shrunk by 5.4% last year.