China has reported some bumper growth figures despite gradual efforts by authorities to cool the economy.
A surge in exports is responsible for an increase in the gross domestic product from 9.6% in the third quarter to 9.8% in the December quarter.
Economists had expected growth to slow to around 9.4%.
In December, consumer price inflation rose 4.6%, in line with most forecasts, but slowing from a 28 month high of 5.1% in November.
The December quarter figures mean that for all of 2010 China recorded 10.3% growth.
It's likely to prompt further interest rate rises in China this year reports the ABC.
"It will be a challenging year for China to battle inflation. December inflation is higher than our expectations. Food prices continued to go up in the first half of this month due to seasonal demand," China Economist at OCBC Bank in Singapore, Dongming Xie said.
"January inflation will very likely go back above 5%. Coupled with strong money inflows evidenced by rising forex purchases, inflationary pressure may remain high for the first half of this year."