BEIJING, Oct 22 — China’s economic growth picked up as expected last quarter as a potent cocktail of breakneck investment and buoyant bank lending more than made up for a slump in exports, the government said today.
Annual gross domestic product growth in the world’s third-largest economy accelerated to 8.9 per cent in the third quarter from 7.9 per cent in the April-June period and just 6.1 per cent in the first three months of the year in the depths of the global downturn.
The median forecast of a Reuters poll was for 8.9 per cent growth, although widespread market whispers over the past week had pointed to a figure of 9.1 per cent.
“Good figures. Economic growth has picked up very swiftly. There’s no doubt that GDP will hit 8 per cent for the whole year,” said Wang Hu, an analyst at Guotai Junan Securities in Shanghai.
Economists said the momentum of quarter-on-quarter growth had actually slowed from the second quarter’s annualised pace of 14.9 per cent, achieved on the back of the initial burst of infrastructure spending from a 4 trillion yuan (RM2 trillion) government’s stimulus package.
But with GDP expanding 7.7 per cent in the first nine months, economists said the government will easily beat its target of 8 per cent average growth for all of 2009, a goal that looked fanciful early in the year when the global financial system was melting down.
And most economists expect stronger annual growth in 2010 given this year’s relatively low base of comparison, the likelihood of a partial recovery in net exports and the fiscal stimulus already in the pipeline.
The median forecast of a Reuters poll published on Oct. 18 was for 9.0 per cent growth in 2010, but several banks have since taken an even rosier view.
Yuan non-deliverable forwards have fallen against the dollar in the past week, partly in anticipation that currency appreciation may resume on the back of stronger economic data.
ING raised its forecast to 11.0 per cent from 9.8 per cent; Macquarie to 10.3 per cent from 8.9 per cent; and Deutsche Bank to 9.0 per cent from 8.3 per cent.
With the United States and Europe emerging from recession with huge debt burdens that will weigh on consumption, global policymakers are looking to China to carry more of the burden of growth by expanding domestic demand.
Data released today by the National Bureau of Statistics showed China doing just that.
Fixed-asset investment in urban areas, which has been the main driver of China’s double-digit GDP growth of recent years, expanded 33.3 per cent in the first nine months, up from 33.0 per cent in the January-August period.
Whereas investment in the first half of the year was overwhelmingly government-led, capital spending by mostly private real estate developers is now surging in response to the ready availability of credit and rising confidence in the economy.
Retail sales rose 15.5 per cent in the 12 months to September, accelerating from August’s reading of 15.4 per cent.
Markets had expected growth of 33.0 per cent in fixed asset investment and 15.5 per cent in retail sales.
Industrial production growth quickened to 13.9 per cent in the 12 months to September from 13.3 per cent in August, beating the median market forecast of 13.3 per cent.
Although the economy has perked up, China is still mired — technically — in deflation. The consumer price index fell 0.8 per cent in September from a year earlier, while producer prices were down 7.0 per cent. Markets had expected declines of 0.8 per cent and 7.0 per cent, respectively.
However, both gauges have shown prices rising steadily month on month and economists expect a return of consumer inflation, measured on a 12-month basis, by the end of 2009. — Reuters
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