China economy slows further but data point to pick-up

Beijing: China’s economic growth eased for the seventh straight quarter, data showed on Thursday, but analysts say the slowdown has almost bottomed out, just as the ruling Communist Party prepares for a pivotal meeting.

The 7.4 per cent expansion in the three months to the end of September was the weakest since the first quarter of 2009 as persistent problems in key export markets in Europe and the United States continued to hurt the economy.

The economy grew 7.6 per cent in the previous quarter.

However, positive indicators for September were seized upon as signs that the economy is bottoming out and that growth could pick up again in the next three months, reducing the need for any major stimulus.

National Bureau of Statistics spokesman Sheng Laiyun told reporters at a briefing to release the data that “signs that the national economy is stabilising are clearer”.

He added: “The main indicators showed that although growth still slowed, the pace of the decline slowed and some indicators even increased at a faster speed.”

A day earlier, state media quoted Premier Wen Jiabao saying the economy began stabilising over the past three months and should meet Beijing’s 2012 goal of 7.5 per cent growth.

The third-quarter result lowered growth for the first nine months to 7.7 per cent, but Sheng reiterated Wen’s comments, saying China was “fully confident” of hitting its target, although he added the economy still faced “uncertainties”.

He also said a “mild rebound” was possible in the fourth quarter, a view echoed by some analysts.

“Basically it’s obvious that the economy is bottoming out, and economic growth will likely be higher in the fourth quarter than the third quarter,” said Lu Ting, Hong Kong-based China economist for Bank of America Merrill Lynch.

Underlining the confidence was September data also released on Thursday by the statistics bureau showing industrial production rose 9.2 per cent year-on-year in September, from 8.9 per cent in August.

Retail sales, meanwhile, rose 14.2 per cent, up from August’s 13.2 per cent, and fixed-asset investments, a key measure of government spending on infrastructure, rose 20.5 per cent in January-September. The eight-month figure unveiled in August was 20.2 per cent.

In another positive sign, data Saturday showed exports rose a solid 9.9 per cent in September year-on-year to a record monthly high, while imports increased after having contracted the month before.

Shanghai’s composite stock index closed 1.24 per cent higher after the news.

Economist Alistair Thornton of IHS Global Insight cautioned, however, that a return to solid growth could still be some way off.

“The picture is one of emerging stabilisation, not the return of unbridled optimism,” he wrote in a research report on the economic figures.

A major driver of world growth, China’s economy grew an annual average of more than 10 per cent in the decade through 2010 but has slowed since early last year on the broader global woes.

Government efforts to curb an overheated real estate market also have blamed for dampening demand in related sectors.

Authorities have tried to bolster the economy this year by cutting interest rates twice and loosening other monetary policies, but with little success.