China's economy resumed double-digit growth in the fourth quarter last year, pushing the annual figure beyond the government target of 8 percent.

But economists warned rising fears of inflation and the risk of market bubbles posed a challenge to a sustained recovery.

The gross domestic product grew 8.7 percent in 2009 after it quickened to 10.7 percent in the last quarter, the National Bureau of Statistics (NBS) announced Thursday.

"China has become the first to revive from the world economic downturn with a typical V-shape recovery," said Ma Jiantang, NBS director, at a press conference.

He attributed the growth to the government's timely stimulus package, as well as the proactive fiscal policy and moderately easy monetary policy.

The Shanghai stock market reacted to the figures with caution, adding 0.22 percent to close at 3,158.86 on Thursday.

To fight off the worst global recession in 80 years, China's government implemented the 4-trillion-yuan stimulus package with hefty spending on infrastructure expansion, such as roads and railways, to counter the 16-percent fall in exports as the downturn sapped demand for Chinese goods.

The nation's commercial lenders pumped out 9.59 trillion yuan (1.4 trillion U.S. dollars) in credit, almost double that of the previous year.

The promising economic climate saw the Shanghai stock market rise by 80 percent in 2009.

"The double-digit growth followed a rebound of exports and robust industrial output growth in December. A low comparison base also contributed to it," said Zhuang Jian, an economist with the Asia Development Bank.

Value-added industrial output gained 11 percent in 2009 after shooting up 18.5 percent last month. Urban fixed-asset investment climbed 30.5 percent in 2009 over the previous year.

Retail sales rose 16.9 percent in 2009 after adjusting price changes. December saw an increase of 17.5 percent.

The brisk consumption was partly buoyed by 13 million auto sales last year, putting China ahead of the United States as the world's largest auto market on the back of government subsidies and tax incentives.

The NBS also revised the first quarter GDP growth from 6.1 percent to 6.2 percent. The third quarter data was raised from 8.9 percent to 9.1 percent.

Ma gave no breakdown of the GDP figures, but promised to release figures at the end of the month after verification. He added the economy would maintain steady and relatively fast economic development in 2010.

After China overtook Germany as the world's largest exporter at the end of last year, exports would resume their positive role in GDP growth this year, along with investment and consumption, Ma said.

Although China's economic recovery was taking more hold strongly, Ma said uncertainties remained in China's economic development since the global recovery was not solidly grounded.

The NBS reported the nation's consumer price inflation added 1.9 percent in December, the second monthly rise after ending nine months of decline in November. The inflation at factory gate level also ended a 10-month fall last month with a rise of 1.7 percent.

Ma said the rising figures were also a warning that close attention should be paid to price changes and asset bubbles.

"We should stick to the economic policy and better handle the relationship between maintaining growth, adjusting economic structure and handling inflation concerns to prevent fast price rises," he said.

Runaway credit figures have stoked fears that loans have been funneled into the property and stock markets, inflating asset bubbles.

Housing prices soared 24 percent to 4,695 per square meter last year, the highest in 15 years.

To prevent excess liquidity and inflation, the central bank is slowly putting the brakes on credit growth.

The central bank has allowed one-year bill yields to rise more than expected and asked commercial lenders to keep more money in reserve.

"Although the outlook for consumer price inflation in 2010 is relatively mild in comparison to the inflationary surge in 2007 and 2008, unexpected spikes in food prices and commodity import bills pose risks that could alter this scenario," said Jing Ulrich, chairman of China equities and commodities of JP Morgan Chase.

Ulrich said inflation was unlikely to materialize in 2010 as the overall domestic demand was not high enough to ignite it.

Industrial overcapacity should limit the ability of manufacturers to pass increased raw materials costs on to consumers, she said in an e-mail.

Xiong Peng, an analyst with the Bank of Communications, forecast any interest rate rise would "not be realized until the second quarter."

But the central bank would adjust the reserve requirement ratio more frequently in the first quarter to balance monetary expansion, he said.

The authorities were more confident about the domestic economic picture than they were a year ago and were scaling back some of the more aggressive stimulus measures that had been introduced, Ulrich said.

"But there are still risks to the recovery, and therefore the exit strategy should be very gradual," Ulrich said.

Ma restated China's persistence in pushing forward economic restructuring, stressing the need to improve the quality and efficiency of growth.

The sole pursuit of growth rate was not desirable, he said.

China's total gross domestic output was 33.5 trillion yuan in 2009, closing the gap on Japan, the second-largest economy after the United States.

However, China was still a developing nation with 150 million people living below the international property line of 1 U.S. dollar a day.

"We should keep a sober mind on that," he said.