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China’s growth accelerates to 8.9 percent in third quarter
The world’s third-largest economy grew 7.7 percent in the first nine months of 2009, bouncing back from a slowdown that began late last year. Officials say they are confident of reaching an annual growth target of 8 percent. “We can say we have made obvious and remarkable achievements in our economic growth,” National Statistics Bureau spokesman Li Xiaochao told reporters in Beijing. “We have quickly reversed the economic slowdown. The momentum of the recovery is solid and overall, our economic performance is showing signs of improvement,” Li said.
China fought off the global downturn with a 4 trillion yuan ($586 billion) stimulus plan involving massive spending on infrastructure such as rail and roads to boost the domestic economy as exports slumped. The strategy paid off, with growth jumping to 7.9 percent in the second quarter of the year from 6.1 percent in the first quarter.
Since last spring, China’s recovery has outshone still feeble signs of a turnaround in other major economies. Industrial output rose 8.7 percent in the first three quarters of the year, and 12.4 percent in July-September, signaling accelerating demand, the statistics bureau said. But while surging purchases of coal, iron ore and other materials have aided global miners like BHP Billiton and Rio Tinto, the impact of China’s comeback has mainly been one of improving global sentiment than of actually driving growth, said Stephen Green, economist for Standard Chartered Bank in Shanghai. “Apart from commodities, there’s fairly limited benefits for the rest of the world,” he said.
Exports collapsed last year and with them imports, mainly of commodities and components used to assemble products for imports. While September data showed a slight improvement, a recovery will depend on stronger growth in the US and other key markets.
Li, the statistics bureau spokesman, described the export climate as ‘severe.’ “Exports remain the key weakness for the Chinese economy,” Moody’s Economy.com economist Alaistair Chan said in a report Thursday.
The latest data underscore the crucial role investment, accounting for nearly 88 percent of GDP growth earlier this year, is playing in China’s growth. Investment in factories, construction and other fixed assets rose by one third in January-September to a record 15.5 trillion yuan ($2.27 trillion).
Even as the economy flourishes, some analysts warn that the heavy reliance on public works and other investment is masking or even worsening weaknesses that are bound to weigh down growth in the long-term. “We’ll see strong growth from China for the next six months, possibly another year,” said Green.
“The problem is what happens after another year and a half. What will be the growth driver then?”
On Wednesday, China’s top leaders signaled their own concerns over imbalances in the economy, with the State Council saying policy will shift to dealing with waste and other problems of high growth. “In the first three quarters, the pace of economic growth quickened,” the State Council said in a statement after a meeting with Premier Wen Jiabao. “At the same time, we also are clearly aware that there are still difficulties and problems in the economic and social development of our country.”
The focus in the next few months will be on curbing industrial overcapacity, promote new industries, maintain liquidity and lower unemployment, it said.
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