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China's econom slows in Q3, but remains strong
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China's econom slows in Q3, but remains strong
AFP - 1 hour 15 minutes ago
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China's econom slows in Q3, but remains strong
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BEIJING (AFP) - – China said Thursday its economy grew at a slower but still robust pace in the third quarter, which analysts said showed efforts to steer the country towards more sustainable growth were working.
Consumer prices rose at their fastest pace in nearly two years in September, official data showed -- an apparent explanation for Beijing's decision this week to hike interest rates for the first time since 2007.
Asian markets initially responded positively to the news, with share prices in Shanghai and Hong Kong higher after the data was released, before easing back over inflation fears.
Gross domestic product expanded 9.6 percent year-on-year in the third quarter, beating analyst forecasts for 9.5 percent growth, according to the National Bureau of Statistics (NBS) data.
The figure marked a decline from the 10.3 percent growth in the second quarter and 11.9 percent in the first three months as Beijing started to withdraw stimulus measures introduced to combat the global crisis.
The closely watched consumer price index, a key measure of inflation, rose 3.6 percent in September from a year earlier, the fastest pace since October 2008, and was 0.6 percent higher than the previous month.
"The overall economy remains sound, and the momentum of economic recovery is further consolidated," NBS spokesman Sheng Laiyun told a press conference.
Sheng however warned there were still "many problems and difficulties" within China, adding Beijing needed to strike a balance between maintaining stable and sound development, and managing inflationary expectations.
Analysts said the data should ease concerns that the world's second-largest economy -- which overtook Japan in the second quarter -- was heading for a sharp slowdown.
"Policy measures put in place earlier this year appear to have helped steer the Chinese economy through a middle course between overheating and a serious downturn," said Brian Jackson, a Hong Kong-based senior strategist at Royal Bank of Canada.
"Today's data provide further confirmation that the slowdown in Chinese growth is very moderate and that conditions are stabilising."
Sheng said the slowdown in growth had tapered off, adding he believed expansion for the full year would exceed 10 percent.
The inflation rate was above the government's annual target of three percent and was mainly due to rising food prices, Sheng said, after widespread flooding and unusually hot weather during the summer wiped out crops.
Beijing-based Citigroup economist Ken Peng said he expected the inflation rate to exceed four percent this year -- but noted it was a level the economy "can easily stomach".
Industrial output from the country's millions of factories and workshops rose 13.3 percent in September from a year earlier.
That was slightly slower than the 13.9 percent growth in the previous month as authorities cracked down on inefficient and highly-polluting factories in a bid to meet energy efficiency targets.
Royal Bank of Scotland economist Ben Simpfendorfer said the data showed the economy was heading towards more normal, sustainable growth.
"It is probably running a little bit too strong at nine percent, ideally eight percent would be more appropriate," he told AFP.
Retail sales, the main gauge of consumer spending in the world's second-largest economy, rose 18.3 percent in the first nine months of 2010 as compared with a year ago.
China's fixed asset investment in urban areas, a measure of government spending on infrastructure and a key driver of growth, rose 24.5 percent in the January to September period, lower than the 24.8 percent growth in the first eight months as officials tightened lending restrictions.
The data comes after Beijing raised interest rates for the first time in nearly three years as it ramped up efforts to contain rising inflation and cool the red-hot real estate market.
Property prices and bank lending rose in September, defying official moves to dampen both, and fuelling fears of a damaging bubble and a potential new crop of bad loans.
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