China's growth accelerates to 8.9 percent in 3Q
SHANGHAI: China's economy charged ahead in the third quarter, fueled by lavish government stimulus spending that has helped the nation spearhead recovery from the global recession.
The world's third-largest economy expanded 8.9 percent from a year earlier, speeding up from 7.9 percent growth in the second quarter, the National Statistics Bureau said Thursday. Growth for the first nine months of the year was 7.7 percent and officials have said they expect the economy to at least reach the annual growth target of 8 percent.
China has countered the global downturn with a 4 trillion yuan ($586 billion) stimulus plan involving massive spending on infrastructure such as rail and roads to pump up the domestic economy as exports slumped.
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).
"Investment played an important and positive role in maintaining relatively fast growth and reversing the slowdown," said Statistics Bureau spokesman Li Xiaochao. Meanwhile, domestic consumption such as consumer spending contributed nearly a third of the growth in economic activity, he said.
The mixture of liberal credit, strong government backing for massive public works and incentives for domestic industries like autos have enabled China's economy to quickly rebound while the U.S., Japan and Europe continue to flounder.
Emblematic of that recovery: China's auto market has surged ahead to become the world's biggest, with sales up 34 percent to 9.66 million vehicles in the first nine months of the year. The streets of Shanghai, the financial capital, are full of shoppers, its restaurants busy as ever. Retail sales growth was 15.1 percent in the first three quarters, the bureau said.
Meanwhile, a mild rebound in orders from overseas markets is restoring some of the millions of jobs lost late last year when factories closed by the thousands as plunging global demand slammed exports.
Despite surging share and property prices, consumer prices fell, with inflation at negative 1.1 percent so far this year, the statistics bureau said.
But while the economy is flourishing, some analysts warn that the investment-fueled recovery, with its strong emphasis on public works, is masking or even worsening weaknesses that are bound to weigh down growth in the long-term.
"China's doing fine. They threw so much money at it that if it wasn't, it would be surprising," said Standard Chartered Bank economist Stephen Green.
"We'll see strong growth from China for the next six months, possibly another year," he said. "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."
China's economic stimulus plan remains on track, but greater efforts will be made to curb industrial overcapacity, promote new industries, maintain liquidity and lower unemployment, it said.
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.