Corruption hits China’s high-speed railway

(FT) — Investigators have found evidence that nearly $30m of funds budgeted for China’s Beijing-Shanghai high-speed rail line was misappropriated last year, in another blow to the country’s scandal-plagued high-speed rail sector.

China’s state audit office said on Wednesday it had identified numerous cases of embezzlement and other irregularities from just a three-month period of construction on the Beijing-Shanghai high-speed line last year and has passed the cases on to judicial authorities for formal investigation.

China’s railway minister and the rail ministry’s deputy chief engineer were both removed from their positions last month for “severe disciplinary violations” — an allegation that usually results in criminal charges for corruption.

The former minister, Liu Zhijun, is the most senior government official to be implicated in corruption in the past five years and his downfall has raised doubts about the future of the hugely ambitious high-speed rail expansion plans he championed.

Neither Mr Liu nor Zhang Shuguang, the former deputy chief engineer at the rail ministry, have been named in connection with the state auditor’s investigation into the 1,318km, $33bn Beijing-Shanghai high-speed rail project, which is scheduled to open to the public next year.

The line is the longest and most expensive high-speed rail project in the country but it has been dogged by scandals and controversies and singled out in previous state audits for financial “irregularities”.

In its latest report the auditor also cited numerous cases of flawed procurement procedures, overcharging, unexplained costs and fake receipts related to the project.

When completed, the railway should reduce travel time between the two cities from about 10 hours now to four hours.

China’s top leaders had already ordered a rethink of the country’s plans before the removal of the rail minister last month but following his dismissal the review has intensified, say industry analysts and Chinese media reports.

China has about 17,000km of high-speed railway built or under construction, by far the longest network in the world, and officials have said projects that have started will not be affected by the review.

The government has said it plans to spend nearly $130bn this year on railway construction and this plan is unlikely to change, according to officials at China Railway Construction, builder of more than half the country’s railroads.

But future expansion and proposed lines will be scrutinised and possibly cancelled.

An intense safety review of all projects is under way because of fears that corruption and the speed with which the network has been built will result in poor quality tracks that are meant to carry trains travelling at up to 380km/h.

G7 countries agree on intervention to control yen rise

The world’s richest nations have carried out coordinated action in the currency markets to try to stabilise the Japanese yen.

It is first time since 2000 that G7 countries have jointly intervened in the currency markets.

The yen weakened after the intervention, recently trading at 80.94 against the US dollar.

Earlier this week, the yen hit 76.25, its strongest since World War II, adding to fears over Japan’s recovery.

The nuclear crisis in Japan, coming soon after a huge earthquake and tsunami devastated the coastline, has hit financial markets around the world, with many worried about the impact on the global economy.

The action began in Japan with the central bank selling yen to try to weaken its value.

It was later followed by similar measures by the Bank of England, the European Central Bank, the US Federal Reserve and the Bank of Canada.

Market reaction

The coordinated action was agreed by the G7 finance ministers on a conference call.

News of the decision had an immediate impact as the Nikkei 225 index gained 2.7% on Friday to close at 9,206.75 points.

US shares rose 1% to 11,889, while shares in Europe also responded to the intervention.

The UK’s FTSE 100 index rose 0.4% to 5,718 and the benchmark German and French indexes were both higher.

“As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” the G7 said in their statement.

“We will monitor exchange markets closely and co-operate as appropriate.”

Meanwhile, the Bank of Japan injected an extra 3tn yen ($37bn; £23bn) into the markets on Friday in a bid to shore up confidence and ensure liquidity.

‘Slow things down’

The intervention by the G7 nations comes after volatility in markets in the aftermath of the earthquake.

Japan’s main Nikkei 225 index lost more than 16% on first two days of the week before recovering on Wednesday.

But just as the stocks were recovering, the yen hit its record-high sending them into a tumble once again.

Japan is the world’s third-biggest economy and relies heavily on exports. A rise in the yen makes Japanese products less desirable abroad.

Nissan has restarted work at at least one of its four car assembly factories, but others are struggling still. Carmaker Toyota has halted operations at its 12 main assembly plants in Japan.

Nissan and rival Honda each lose around 2bn yen in profit a day with the shutdowns.

Electronics manufacturers fared little better.

Sony opened one factory, which makes optical films used in liquid TV screens, and adhesives. Seven other plants, which make everything from Blu-ray discs to lithium batteries, remain closed.

http://www.bbc.co.uk/news/business-12781534

Japan quake may be world’s costliest disaster

(CNN) — The devastating earthquake and tsunami in Japan will rank among the costliest natural disasters on record, experts predict.

Japan’s central bank announced plans Monday to inject a record 15 trillion yen ($183 billion) into the economy to reassure global investors in the stability of Japanese financial markets and banks. The Bank of Japan also earmarked an additional 5 trillion yen ($61 billion) in aid for risky assets in an effort to bolster market confidence shaken by the disaster.

Still, Japanese markets dropped sharply on Monday, the first trading day since the disaster. The benchmark Nikkei 225 was down more than 6.2%.

The drop was the largest single day fall since December 2008 during the financial crisis.

The disaster comes at a difficult time for the fragile Japanese economy, which slipped to the world’s third largest behind China in 2010. Japan’s export-driven business was hit by the financial crisis and a strong yen, which hurt profits from sales abroad.

Big drop for Tokyo stocks

Economic effect of quake

‘Most difficult crisis’ since WWII

The rebuilding from the quake also will add to Japan’s towering load of public debt; it is nearly twice the size of its total GDP and the highest in the developed world. S&P downgraded Japan’s long-term credit ratings in January, citing its high fiscal deficits.

CNNMoney Interactive: 10 largest economies

The TOPIX futures index halted trading around 9 a.m. for 15 minutes as trading quickly spiralled down. “The stoppage was a result of a circuit breaker mechanism, triggered “if shares fall beyond a specific range,” said Andrew Wong of the Tokyo Stock Exchange.

Losses from the disaster will total at least $100 billion, including $20 billion in damage to residences and $40 billion in damage to infrastructure such as roads, rail and port facilities, catastrophe modeling firm Eqecat estimated, according to CNNMoney.

CNNMoney: Japanese earthquake could be most expensive ever

Another firm, AIR Worldwide, estimated that losses covered by insurance could reach between $15 billion and $35 billion from the earthquake alone, CNNMoney said. It did not estimate losses from the tsunami or the damage to the the Fukushima Daiichi nuclear plant in northeastern Japan.

“If claims come in at the middle of that range, the cost of the disaster would surpass all other natural disasters besides 2005’s Hurricane Katrina,” according to a Barclay’s Capital research note released Monday. “Katrina losses cost the insurance industry around US$45 billion.”

On edge after second tsunami warning

A slice of life before quake

Gallery: Massive quake hits Japan

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• Japan
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Stocks from automotive giant Toyota fell more than 8%, while Nissan fell 9% and Honda dropped more than 6%.

Toyota shut production at manufacturing plants and affiliated suppliers nationwide until end of day Wednesday.

“We are placing priority on making sure that we are supporting the relief efforts in the region affected and ensuring the safety of all our employees,” said Dion Corbett, Toyota spokesperson.

Toshiba Corp., maker of nuclear power plants, fell more than 16% as concerns escalated at several nuclear power plants in the aftermath of Japan’s largest quake on record and powerful tsunami.

Tokio Marine Holdings, the insurer, fell more than 12%.

Miyagi Prefecture, the area hardest hit by the earthquake, makes up about 1.7% of the population of Japan and accounts roughly for the same amount of the nation’s total economic output, said Richard Jerram, an analyst at Macquarie Research. By contrast, the area struck by the 1994 Kobe earthquake “made up almost 4.0% of (Japan’s) GDP and the importance of its port and its geographic position between Osaka and Western Japan meant that the disruption was significant,” Jerram said.

Still, the rolling power blackouts, looming nuclear problems and damage to infrastructure add uncertainty to predicting the total impact to one of the world’s largest economies. “It’s very hard to make a forward-looking assessment, because you just don’t know,” Jerram said.

http://edition.cnn.com/2011/BUSINESS/03/14/japan.quake.economy.monday/index.html

Mideast turmoil increases EU inflation risks

(FT) — European inflation risks have mounted as a result of turmoil in the Middle East, the European Commission has warned as a fall in eurozone unemployment highlighted the robust pace of economic growth across the continent at the start of the year. Surging energy and commodity prices mean inflation this year will be “markedly” stronger than thought with risks to forecasts “somewhat tilted to the upside” because of recent geo-political tensions, the European Union’s executive arm warned in its latest update on the region’s economy. Tuesday’s comments came as Eurostat, the EU’s statistical office, reported the eurozone annual inflation rate hit 2.4 percent in February, up from 2.3 percent in January and the highest since October 2008. The Commission’s forecasts and latest economic data strengthen the case for the European Central Bank taking a harder line on inflation threats at its council meeting on Thursday. It is widely expected to signal that an interest rate rise in coming months has become more likely. The ECB has held its main interest rate at the record low of 1 percent since May 2009. Led by Germany, the eurozone saw economic growth rebounding at the start of the year. The Commission said it expected the 17-country bloc’s economy to expand by 1.6 percent in 2011, compared with the 1.5 percent it had forecast in November. That would mean that growth had lost little momentum after the 1.7 percent pace of expansion seen in 2010. But the pattern of growth remains uneven. The commission said: “Germany continues to benefit from the robust external environment and strong domestic demand dynamics, whereas significant adjustment challenges still weigh on activity in several other countries.” Bucking the European trend, forecasts for growth in the UK — not part of the eurozone — were revised down, reflecting the contraction in the British economy at the end of 2010. But the UK was still expected to expand more quickly than the eurozone, with gross domestic product rising by 2 percent, compared with the 2.2 percent forecast in November. The Commission’s inflation forecasts saw much larger revisions. The eurozone rate would average 2.2 percent this year — compared with the 1.8 percent it had expected in November. The Commission’s forecasts are closely watched because the ECB, which will publish revisions to its projections on Thursday, uses a similar methodology. Falling unemployment would further support the eurozone recovery. In January, the eurozone unemployment rate dipped to 9.9 percent, down from 10 percent in December. Although the fall was small, it was the first drop since early 2008 and indicated that eurozone joblessness had peaked and may have started a downward trend. Germany continues to enjoy strong falls in unemployment. National figures for February showed a larger than expected 52,000 fall in the seasonally-adjusted total to 3.1m. The German unemployment rate dropped to 7.3 percent in February, from 7.4 percent in January, and the lowest since 1991.



Japan Economy Shrinks Less-Than-Estimated 1.1%, Surpassed by China in 2010

Japan’s gross domestic product fell less than estimated in the fourth quarter in a pullback that may prove temporary as overseas demand revives production after the nation fell behind China as the world’s second-largest economy.

The annualized 1.1 percent drop in GDP in the three months through December was driven by a slowing in exports and fading of government stimulus programs, Cabinet Office figures showed today in Tokyo. The median forecast of 26 economists surveyed by Bloomberg News was for a 2 percent drop.

Japan’s stocks rallied amid confidence the global economic recovery will strengthen as oil prices retreat and international political tensions subside with the resignation of Egyptian President Hosni Mubarak. The rebound is set to benefit Japanese exporters, with Toyota Motor Corp. and Komatsu Ltd. this year raising profit forecasts because of increasing sales abroad.

“This was just a temporary contraction and growth may accelerate more than investors anticipate this quarter and next,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo, who forecast a 1.3 percent decline. “The export decline was smaller than expected and shipments will keep expanding as long as Asia’s economies continue to boom.”

The Nikkei 225 Stock Average has risen 4.5 percent this year, and advanced 0.8 percent as of 10:51 a.m. in Tokyo today. Japan’s benchmark 10-year government bond yields have also climbed since the start of 2010, reaching a 10-month high of 1.35 percent last week. They slipped today to 1.30 percent. Japan’s currency traded at 83.35 per dollar. The yen reached a 15-year high of 80.22 on Nov. 1.

Trade Impact
Net exports, or shipments less imports, subtracted 0.1 percentage point from GDP, beating economists’ estimates of a 0.2 point drop. Overseas shipments declined 0.7 percent, also better than forecasts for a 1.6 percent decline. Imports dropped 0.1 percent compared with a forecast for a 0.9 percent decline.

GDP will expand 0.6 percent in the first quarter and accelerate to a 1.9 percent pace by the final three months of 2011, according to the median estimates of 14 economists surveyed by Bloomberg News before today’s report.

Private consumption dragged down GDP after the government ended a subsidy program to buy fuel-efficient cars in September and reduced incentives to purchase electronic home appliances in December, a program that will end in March.

“This was a temporary pullback from the stimulus boosts in the third quarter, so we don’t need to be too pessimistic about the economic outlook,” said Susumu Kato, chief economist for Japan in Tokyo at Credit Agricole CIB and CLSA. “The economy will likely gain traction toward the end of this year.”

Corporate Forecast
Toyota Motor, the world’s largest carmaker, last week raised its full-year profit forecast by 40 percent as sales in Asia and other emerging markets exceeded its estimates. Komatsu, the world’s second-largest maker of construction equipment, last month also raised its earnings forecast after increasing demand in Asia helped third-quarter profit more than triple.

“Japan bottomed out in the fourth quarter,” Yuichi Kodama, an economist at Meiji Yasuda Life Insurance Co., Japan’s third- biggest life insurer, said before the report. China’s economy is already showing signs of resurgence and the U.S. is rebounding, building up expectations of an export-led revival in Japan.”

Capital investment gained 0.9 percent in the fourth quarter from the previous three months. Consumer spending, which accounts for more than half of GDP, fell 0.7 percent after the government scaled back stimulus measures that drove growth in the third quarter.

China’s Rise
China’s $5.88 trillion GDP surpassed Japan’s $5.47 trillion in 2010, the Cabinet Office said today. Economic and Fiscal Policy Minister Kaoru Yosano said China’s expansion is a “welcome development.”

Government data released in the past month showed that machinery orders rose for the first time in four months in December, signaling a recovery in companies’ capital spending, while industrial production increased the most in 11 months and export growth accelerated.

“Companies are looking abroad to expand their production bases rather than increasing domestic business investment,” said Hiroshi Shiraishi, an economist at BNP Paribas SA in Tokyo. “The recovery in capital spending could be weak.”

In an effort to bolster private demand, the Bank of Japan lowered its benchmark interest rate close to zero and has purchased financial assets ranging from corporate debt to exchange-traded funds. The central bank has pledged to keep rates on hold until the end of deflation is in sight.

BOJ Policy
“If the yen resumes its gains or Japan finds it difficult to emerge from deflation by the end of fiscal 2011, there could be calls for further monetary easing,” said Norio Miyagawa, senior economist at Mizuho Securities Research and Consulting Co. in　Tokyo.

Prime Minister Naoto Kan, who is trying to generate economic growth while keeping the world’s largest debt from increasing, has so far failed to persuade opposition lawmakers to agree on financing bills for his record 92.4 trillion yen ($1.1 trillion) budget for the year starting April. Finance Minister Yoshihiko Noda said Japan’s economy faces “the risk of economic slowdown” if parliament fails to move.

The GDP deflator, a gauge of price trends, fell 1.6 percent in the fourth quarter from a year earlier, smaller than the 2.1 percent drop in the previous quarter. In nominal terms, the economy contracted an annualized 2.5 percent in the fourth quarter, today’s report showed.

“There should be an effective policy response to try to address the fiscal deficit” said Thomas Byrne, senior vice president of Moody’s Investors Service, which has a stable outlook on Japan’s Aa2 sovereign credit rating. “Any policy drift or friction” that prevents passage of bills in parliament “would be a credit-negative development,” he said in an interview last week.

Standard & Poor’s lowered its sovereign-debt rating for Japan to AA- last month, the first reduction in nine years, saying that Kan’s government lacks a “coherent strategy” to reduce the country’s debt.

Factories boom, but with few new workers

The U.S. manufacturing sector is roaring back after the worst recession in generations. So why aren’t factory jobs coming back as quickly?

One big reason: Business executives like Drew Greenblatt, owner of Baltimore-based Marlin Steel Wire Products, have figured out how to make more widgets with the same number of workers. To do so, he’s had to upgrade the skills — and wages — of his employees. But his profits are bigger than ever. Last July, the company, which makes wire baskets, installed $700,000 worth of robots, continuing a steady process of automation Greenblatt began when he bought the company in 1998.

“In the old days, we had a $6 an-hour-guy who would hand-bend 300 bends an hour,” said Greenblatt. “Now we have guy who’s paid $22 an hour with the robots but he’s giving me (20,000) bends an hour. Do the math.”

For Greenblatt, the math goes like this: Last year, his revenues and profits were up 12 percent — his best year since buying the company in 1998. That year, Merlin Steel did $800,000 in sales with 18 workers. Today the company has 25 employees and does $3.9 million in sales, exporting to 33 countries.

Automation raises productivity not just by making products faster; it also makes them better, said Greenblatt.

“It’s better quality, so we have a lot less rework,” he said. “We have more reorders because the client is delighted. And we ship faster because we’re not going back and fixing things.”
Productivity gains like those continue to show up throughout the manufacturing sector. The level of output per hour worked rose by 2.6 percent in the last three months of 2010, the Labor Department reported Thursday.

A separate report by the Commerce Department showed that U.S. factory orders rose in December, pushed higher demand from businesses for machinery and communications equipment. Orders have risen in five of the past six months.

The rise in orders has prompted manufacturers to boost hiring. On Friday, the government reported that the sector added 49,000 new jobs in January – even as bad weather dampened employment gains for other industries.

McDonald’s Profit Rises 2.1% as Frappes Draw Customers

McDonald’s Corp., the world’s biggest restaurant chain, reported a 2.1 percent gain in fourth- quarter profit as new menu items lured diners, offsetting slower-than-estimated December sales because of snowstorms.

Net income rose to $1.24 billion, or $1.16 a share, the Oak Brook, Illinois-based company said today in a statement. In the U.S., same-store sales advanced 2.6 percent last month, compared with a 4 percent average of five analysts’ estimates compiled by Bloomberg.

December sales in the U.S. were hurt by inclement weather, the retailer said, damping demand for frappes and the new Angus snack wraps that drew customers during non-meal times in the previous months.

“The results are not as impressive as a lot of people have been used to,” said Larry Miller, an analyst at RBC Capital Markets in Atlanta, who rates the stock “outperform.” “We knew that weather was hurting them.”

Excluding income related to a license transaction in Latin America, fourth-quarter profit was $1.15 a share. Analysts estimated $1.16, on average. Revenue increased 4 percent to $6.21 billion, matching the average projection. Net income was $1.22 billion, or $1.11 a share, in the year-earlier period.

Smoothies, Oatmeal

McDonald’s, which has more than 32,000 locations worldwide, also added smoothies to its menu to lure customers. In January Chief Executive Officer Jim Skinner started selling oatmeal in the U.S., a nation that accounts for one-third of sales.

Sales at stores open more than 13 months rose 3.7 percent globally last month, compared with a 4 percent average analysts’ estimate. McDonald’s said it expects comparable-store sales to increase as much as 5 percent in January.

McDonald’s will probably raise prices this year to offset rising ingredients costs, Chief Financial Officer Peter Bensen said on a conference call with analysts. Meat prices may climb as much as 3.5 percent this year, according to the U.S. Department of Agriculture.

McDonald’s rose 37 cents to $75.38 at 4 p.m. in New York Stock Exchange composite trading. The shares have increased 19 percent in the past 12 months.

Last month, snowstorms pummeled the East Coast, dumping as much as 20 inches (51 centimeters) of snow on parts of New York City, and keeping customers at home.

Some of McDonald’s fast-food rivals are unloading brands to focus on their most successful businesses. Last week Yum! Brands Inc. said it plans to sell the Long John Silver’s and A&W-All American Food restaurants to focus on other chains such as KFC and Taco Bell. Wendy’s/Arby’s Group Inc., the third-biggest U.S. hamburger chain, also said last week that it will seek a buyer for the Arby’s sandwich restaurants.

Oil prices surge after Alaska pipeline shuts down

NEW YORK – Oil prices rose above $89 a barrel Monday after the 800-mile trans-Alaska pipeline owned by BP PLC and four other companies was shut down because of a leak.

Benchmark oil for February delivery climbed $1.22 to settle at $89.25 a barrel on the New York Mercantile Exchange.

The pipeline, which carries between 630,000 barrels and 650,000 barrels a day, was shut down Saturday after a leak was reported at a North Slope pump station. The leak has been contained but there is no immediate timeframe for reopening the pipeline, according to Alyeska Pipeline Service Co., which manages the line.

The closure cut oil production on the North Slope to about 5 percent of normal. The pipeline carries 17 percent or less of the U.S. crude output.

Refineries that rely on Alaska crude have several weeks of inventories available so prices aren’t expected to top $100 a barrel because of the closure, according to The Schork Report, an energy consulting firm.

“We don’t believe the news as it stands is enough to push crude oil above the $100 barrier,” The Schork Report said. “If production is reduced to 5 percent until March or April, then we’ll change our mind.”

Once a repair schedule has been released, oil prices could ease, added Cameron Hanover energy consultancy in its Monday report.

In addition to BP, the other pipeline owners include ConocoPhillips, ExxonMobil Corp., Unocal Pipeline Co. and Koch Alaska Pipeline Company LLC.

Meanwhile, a stronger dollar tempered the rise in oil and other energy prices. Since crude is priced in dollars, a stronger dollar makes it more expensive for buyers who use the euro or other currencies.

Gasoline pump prices are at a national average of $3.09 for a gallon of regular. That’s about 11 cents more than a month ago and 35 cents above a year ago.

In other Nymex trading in February contracts, heating oil gained 6.98 cents to settle at $2.5561 a gallon, while gasoline futures added 4.12 cents to settle at $2.4543 per gallon. February natural gas futures lost 2.3 cents to settle at $4.399 per 1,000 cubic feet.

In London, Brent crude rose $2.43 to settle at $95.70 a barrel on the ICE Futures exchange.

___

Associated Press writers Pablo Gorondi in Hungary and Alex Kennedy in Singapore contributed to this report.

G-20: We’ll avoid currency war

NEW YORK (CNNMoney.com) — Leaders of the G-20 nations on Friday agreed to “refrain” from all-out currency warfare, but failed to meet high expectations that they would come up with a plan to stabilize the world economy.

Completing a two-day summit in South Korea, the G-20 nations released their so-called Seoul Action Plan, a communiqué that outlines a wide range of macroeconomic policies.

The general goal, as stated at the outset of the world financial crisis in 2008, is to try and prevent the world from sliding into another economic slump.

“The actions agreed to today will help to further strengthen the global economy, accelerate job creation, ensure more stable financial markets, narrow the development gap and promote broadly shared growth beyond crisis,” read the G-20 plan.

One of the many pledges is to “refrain from competitive devaluation of currencies.” This is a direct reference to one of the more contentious subjects in international financial relations: the currency dispute between the United States and China.

“Advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates,” read the G-20 plan.

U.S. critics believe that China is keeping its currency, the yuan, artificially low by hoarding reserves, keeping its exports cheap and undercutting international competitors.

U.S. Treasury Secretary Tim Geithner has tried to sort out the problem and defend against claims that the United States is deliberately weakening the dollar.

However, the conclusion of the G-20 summit failed to convince experts that any real progress had been made, particularly in the U.S-China currency dispute.

“The failure to agree to any definitive action should come as no surprise to the currency markets,” said Mark O’Sullivan, director of dealings at Currencies Direct, a London-based currency transfer services company. “The vague set of indicative guidelines issued in the final communiqué, really once again underlines how little effect the G-20 can have on the current problems the global economy faces.”

The G-20 said it will hold its next summit in France in 2011, followed by the 2012 summit in Mexico.

China’s economy cools in third quarter

NEW YORK (CNNMoney.com) — China’s economic growth slowed for the second quarter in a row, cooling fears that its economy is growing at an unsustainable pace.

China’s gross domestic product, the broadest measure of economic output, grew at an annual rate of 9.6% during the third quarter of 2010, according to figures from the National Bureau of Statistics released Thursday.

While that rate is still considered rapid compared to sluggish growth in western economies, the pace has slowed somewhat, down from a surging 11.9% growth rate at the beginning of the year.

“The earlier jitters in China’s economy have passed and the economy is growing pretty rapidly at the moment,” said Mark Williams, senior China economist for Capital Economics. “That’s a positive for those countries that are supplying China with goods, and at the same time, China’s trade surplus is also growing. That means that China’s exporters are also still doing very, very well.”

Separately, China reported that consumer prices rose 3.6% compared to a year ago, up from 3.5% in August. The increase in inflation was due entirely to higher food prices caused by flooding in the southern part of the country, Williams said. Non-food inflation fell for the second month in a row, to 1.4%.

Leading the global recovery: Forecasts from the International Monetary Fund project China is on track for staggering 10.5% growth overall in 2010, far outpacing the 4.5% growth for the global economy as a whole.

Amid that global imbalance, China has taken on a leadership role as the key driver of a worldwide recovery. But its steep growth has also led to fears that the Chinese economy might be expanding too quickly.

Those fears recently prompted officials there to implement policies to slam on the brakes in some sectors including the overheating real estate market. And on Tuesday, the People’s Bank of China added to those efforts when it raised its benchmark interest rate in a surprise effort to further curb lending in the country.

On the other hand, economists have worried lately that tighter policies could result in a so-called hard landing, bringing the Chinese economy to a halt.

But Thursday’s report shows the Chinese economy is still expanding rapidly.

While annual growth near 10% is not unusual for China, it’s still far faster than the 7.5% rate the Chinese government aimed for when it set its 5-year goal back in 2006, said Damien Ma, China analyst with the Eurasia Group.

“China has consistently overshot its plan for the past decade, so it’s no surprise there are strong voices advocating for slower growth,” he said.

0:00 /2:48DuPont CEO: China’s where it’s at //

Currency wars: China has come under fire from foreign governments for not allowing its currency, the yuan, to appreciate against freely-traded currencies. Since an artificially low yuan makes it harder for other countries to compete with Chinese exports, U.S. officials and Congress have been pushing China to allow its currency to rise.

The rapid growth rate reported on Thursday could continue to fuel those fears.

“A lot of people outside China, particularly in the United States, will look at China’s growth rate and suggest China is doing very well and surely can afford to move a lot faster on currency reform than it has done so far,” Williams said.

The yuan has appreciated 2.5% since China announced it would let its currency trade more freely against the dollar in June, he said.

Industrial production and retail sales: China’s industrial output was weaker than expected in September, but balanced by strong retail spending.

Industrial production grew at an annual rate of 13.3% in September, down from 13.9% in August. Retail sales rose by 18.8% year-over-year, up from an 18.4% growth rate in August.