China revises 2007 GDP growth up to 11.9 pct

BEIJING (Reuters) - China on Thursday revised up its GDP growth for 2007 to 11.9 percent from 11.4 percent, showing that the world's fastest-growing major economy had even more of a banner year than initially thought.

Gross domestic product expanded last year at the quickest pace since 1994 and, but for a strengthening of the euro, would probably have moved China clear of Germany as the world's third-biggest economy when expressed in dollar terms.

The statistics agency also revised up 2006 GDP growth to 11.6 percent from 11.1 percent.

The upward revisions reflected greater output in the service sector than was initially reported, data on the National Bureau of Statistics (NBS) Web site showed.

With many analysts forecasting weaker growth this year, the GDP restatement provided a timely reminder that China has a habit of delivering unexpectedly strong economic performances.

Tim Condon, head of Asia research at ING in Singapore, said he was a little sceptical of the slowdown story. "China may once again surprise on the upside," he said.

"Domestic demand is fully capable of offsetting the foreign demand component that may slow down because of the narrowing trade surplus and keep that growth rate pretty high," he said.

As China's economy goes from strength to strength, so does its currency. The yuan CNY=CFXS punched through the symbolic barrier of 7 to the dollar on Thursday for the first time since Beijing scrapped its peg to the U.S. currency in July 2005 [nSHA132461].

PEAKED LAST YEAR

Services grew by 12.6 percent last year, compared with an initial estimate of 11.4 percent, accounting for the entire revision in GDP growth, the statistics agency said.

Services also explained the stronger 2006 GDP growth, with the sector's output estimate lifted to 12.1 percent from 10.8 percent.

There were no changes in growth figures for the agricultural or industrial sectors in either 2006 or 2007.

Separately on Thursday, an official from the statistics agency said China's economy probably hit the top of the cycle last year and will begin to lose some altitude on the back of weaker exports.

"According to our initial estimate, the year 2007 witnessed the peak of the economic growth cycle," Xu Xianchun, NBS deputy head, said in a front-page article in China Information News, a newspaper run by the statistics agency.

But China's consumer price inflation may rise in 2008 from the 4.8 percent it averaged in 2007, Xu said.

"In the previous cycle, China's growth peaked in 1992 but inflation did not reach its peak until 1994," he said, referring to that year's inflation rate of 24.1 percent.

It is customary for China to revise GDP figures twice after their initial publication, meaning that the 2007 figures could change once more, although the 2006 data should be final.

The statistics agency is scheduled to release first-quarter GDP figures next Thursday alongside other economic indicators for March.

Analysts polled by Reuters expect GDP growth of 10.0 percent, down from 11.2 percent in the final three months of 2007, as the global slowdown weighs on China's roaring economy.

China's GDP has grown by at least 10 percent for five years in a row. The International Monetary Fund on Wednesday cut its forecast for the China's 2008 growth to 9.3 percent from 10.0 percent.

(Reporting by Simon Rabinovitch and Zhou Xin; Additional reporting by Emmie Wang; Editing by Alan Wheatley)