Oct. 18--The Chinese Red Dragon today roared ahead at its quickest pace this year but the world's second-biggest economy failed to allay fears over another looming slowdown.
Its economy advanced 7.8 percent on a year earlier between July and September _ picking up from the 7.5 percent seen in the second quarter, the slowest for two decades. The figures come two days after US politicians pulled away from a debt default, and mark a welcome acceleration after slowing for eight of the past 10 quarters.
Beijing is still on course to hit its official 7.5 percent growth target this year, but fears remain over whether China can keep up the current pace. The third-quarter growth was fuelled by stimulus programmes and looser monetary policy but worrying signs, including falling exports and slowing industrial production, emerged in September.
The People's Bank of China is also concerned over rising credit growth as property prices surge. Inflation at a seven-month high of 3.1 percent is also likely to stay the hands of policymakers from giving more help to the economy. Extreme weather also hampered the economy.
Katie Evans at the Centre for Economics and Business Research said: "Serious doubts remain about the sustainability of China's current growth trajectory. Demographics alone are enough to lower China's potential growth, but when combined with high levels of local government debt, high leverage in the shadow banking sector and a latent property bubble, the likelihood of a hard landing rises substantially."
Societe Generale economist Wei Yao said: "Activity growth slid across the board in September. The data releases confirm our view of a short-lived headline growth bounce."
The US Federal Reserve has added to Beijing's headaches by delaying its decision to taper quantitative easing, pushing funds back into China and lifting the value of the yuan to record levels. This puts Chinese exporters under pressure as the rising currency erodes their competitiveness.
China is meanwhile struggling to rebalance its economy towards domestic spending with investment this year accounting for more than half of growth. This has slowed its advance in recent years although sluggish global demand has provided an added drag.
ING Bank economist Tim Condon said: "Rebalancing means more consumption _ and less investment-driven growth. If it's happening, it's happening slowly."
(c)2013 London Evening Standard
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Distributed by MCT Information Services
Original headline: China powers back to faster growth �but for how long?
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