China welcomes the Year of the Dragon with fireworks and hopes that the mightiest sign in the Chinese zodiac will usher in the wealth and power that it represents. Prime Minister Wen Jiabao has stated that the nation should be prepared to face bigger challenges this year.

We are going to face bigger challenges in the New Year, Wen said in a meeting with top officials, ahead of the beginning of the Year of the Dragon, the most favorable and revered sign in the 12-year Chinese zodiac.

The year 2012 is set to be an important year politically as President Hu Jintao ends his second term as party head and hands over the reins to a successor, widely expected to be Vice President Xi Jinping.

Meanwhile the good news was that China's economy grew faster than expected in the fourth quarter of 2011. Fears that China's economy would suffer seriously, with a severe slowdown in growth as the government attempted to pull down inflation, have eased with this awareness. Though down from the third quarter's 9.1 percent year-on-year rate, it was still stronger than the consensus expectation.

Based against the third quarter 2011, the fourth-quarter figures represent a seasonally adjusted annual growth rate of 8.2 percent. For the whole of 2011, the annual rate of China's economic expansion slowed to 9.2 percent, down from 10.4 percent in 2010.

For 2012, further slowing down of the economic growth is expected in the first half before a pick-up toward the end of the year. Chinese growth is characterized by a very high rate of investment and a relatively low level of consumption. Chinese leaders say they are dedicated to rebalancing the development model to make it less dependent on exports.