China shows signs economic recovery taking shape
BEIJING -- China's economic growth tumbled to the lowest in more than three years in the latest quarter but retail sales and other activity accelerated in a sign a recovery from the painful downturn is taking shape.
The world's second-largest economy grew by 7.4 percent in the three months ending in September, below the Communist Party's 7.5 percent target for the full year, data showed Thursday. That was down from the previous quarter's 7.6 percent and the lowest since the first quarter of 2009 in the midst of the global crisis.
In a sign of an emerging recovery, economic activity in the latest quarter was up by 2.2 percent from the previous three month period, the biggest quarter-on-quarter gain in a year, said Dariusz Kowalczyk, senior economist for Credit Agricole CIB in Hong Kong.
"This confirms that the economy is rebounding from the trough in the first quarter of this year," Kowalczyk said. "There is no room and no need for further major stimulus."
Beijing has cut interest rates twice since early June and is injecting money into the economy through high investment by state companies and spending on building subways and other public works. But authorities have avoided launching a massive stimulus after huge spending in response to the 2008 global crisis fueled inflation and a wasteful building boom.
Retail sales rose 14.4 percent, accelerating from the 14.1 percent rate for the first half of the year. Investment in factories and other fixed assets also improved, rising 20.5 percent in the first nine months of the year, up from a 20.2 percent rate for the first eight months.
"We can see a clear sign of steady economic growth," said Sheng Laiyun, spokesman for the National Bureau of Statistics. "There is a smaller margin of decline and some major indicators have been growing faster."
A rebound in Chinese growth would be good news for economies such as Australia, Brazil and African countries that supply its factories with iron ore and other commodities.
The slowdown is due largely to government curbs imposed on lending and investment controls to cool an overheated economy and inflation. But it worsened last year after global demand for Chinese goods plunged unexpectedly.
China's expansion is strong compared with the United States and Japan, where this year's growth is forecast in low single digits, but the slowdown has been painful for companies that depend on high growth to drive demand for new factories and other goods.
The slump raised the risk of job losses and unrest, posing a challenge to the ruling party as it prepares for a once-a-decade handover of power to younger leaders. The further quarterly decline had been expected after officials including President Hu Jintao warned that growth might slow further before recovering.
Premier Wen Jiabao, the country's top economic official, said Wednesday growth appeared to be stabilizing and expressed confidence China can meet its official targets for the year. Wen gave no growth forecast or a possible time frame for a recovery.
Wen acknowledged manufacturing and heavy industry still were in "relatively difficult" conditions but said high-tech companies and services were doing better.
Trade data reported earlier this month showed September exports grew by an unexpectedly strong 9.9 percent.
A Chinese recovery could help to boost demand for commodities but otherwise its contribution to global growth will be limited because the country meets much of its demand from its own factories, said Kowalczyk. He said that was reflected in the relatively weak September import growth of just 2.4 percent.
"The impact on the rest of the world will be more psychological rather than real, major growth," he said. "But it is good to know the risks from China to the global economy are sharply lower."
Chinese National Bureau of Statistics (in Chinese): http://www.stats.gov.cn