China says 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 GDP figures next month. Its economy is likely to have contracted by about 6% in 2009.
'Right direction'
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 is moving in the right direction.
Annual growth was only slightly down on 2008.
But Mr Ma played down speculation that China's economy had now overtaken Japan's.
"According to the UN standard - that is $1 a day - there are still 150 million poor people in China. That is China's reality," he said.
"So despite the increase in our GDP and economic strength, we still have to recognise that China is still a developing country."
These latest GDP figures have exceeded the target set by the Chinese government, the BBC's Chris Hogg in Shanghai says.
This is a turnaround because China, like other countries across the world, was hit by the economic crisis during late 2008 and early 2009. Factories closed and workers were laid off.
China's economy recovered with the help of a massive government stimulus package and now there are signs it is expanding too quickly.
Inflation is picking up, with Mr Ma saying consumer prices increased by 1.9% in December from a year earlier.
"It reminds us to be fully aware of following the trend of price changes," he said at a press conference to announce the economic data.
Mr Ma said price rises were "mild and under control", but over recent days the government has tried to limit the amount of loans made by the country's banks.
However, some economists have questioned the reliability of China's economic data, with some accusing the government of overstating economic growth for political reasons.
Predictions
Meanwhile, the World Bank has said that the global economic recovery will slow later this year as the impact of government stimulus policies wanes.
The Bank has forecast growth of 2.7% this year after a contraction in 2009.
However, its predictions for Japan are slightly less pessimistic than other forecasters. It estimates that Japan's economy shrunk by 5.4% last year.
It added that the poorest countries - those that rely on grants or subsidised lending - may require an additional $35bn to $50bn in funding just to sustain pre-crisis social programmes.
China is expected to become the world's biggest economy in 2030.
