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.

Jim O'Neill, chief economist at Goldman Sachs, said "[In] November 2008, they came up with a quick, aggressive fiscal and monetary response which has worked," he told BBC Radio 4's World At One Programme.

"They have replaced exports with domestic demand, both consumption and investment... China has become more important as America [has become] less, which is what the world needs."

He said part of the reason behind the global crisis was that the world had become dependent on the US consumer, and the realisation of that had now forced countries to stand up for themselves.

"The most important one is China and their economy is now being driven by their own domestic economy, which will not only be increasingly important for them but important for everyone else including - directly and indirectly - people in Britain," he said.

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 was moving in the right direction. Annual growth was only slightly down on 2008.

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very strong growth but there's real concern about the quality of the growth and what will happen when the stimulus is withdrawn," said Michael Pettis, professor of finance at Peking University.

"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 had even been told to stop lending for the rest of January.

China is expected to become the world's biggest economy in 2030.

Source: BBCB