China Q3 GDP grows 6.7% on-year, in line with estimates

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The world's second-largest economy grew 6.7 percent on-year during the July-September quarter, unchanged from the previous three months, government data showed on Wednesday.

The report was bang in line with Reuters' prediction and revealed a steadying pace of expansion as the Chinese government ratchets up spending and as a property boom offsets stubbornly weak exports.

"As always, the GDP figures will be met with some skepticism...We think that the official figures, which failed to reflect much of the sharp slowdown in growth shown by our measurements last year, are now failing to acknowledge a recent pick-up in growth," Julian Evans-Pritchard, China economist at Capital Economics, said in a note.

Asian equity markets were little changed following the data, while the Australian dollar was steady at $0.7685.

With the economy regaining its poise, the government may now look to curb the frenzy in the country's property sector, analysts said.

"The government will now focus on capacity reduction and corporate deleveraging. Supply-side structural reforms will set the tone of overall economic policy through to the Congress meeting next March," Australia New Zealand Bank economists said in a note.

They expect the People's Bank of China to leave interest rates unchanged until year-end while focusing on managing liquidity in the money market.

A man passes a military propaganda poster on a street in Shanghai, China.

But while Wednesday's report may appease worries about a hard landing, some economists cautioned that the stabilization isn't set to last long.

"The recent recovery is ultimately on borrowed time given that it has been driven in large part by faster credit growth and a property market boom, both of which policymakers are now working to rein in. As the boost from policy stimulus begins to wear off, probably at some point early next year, continued structural drags mean the economy is set to begin slowing again," said Evans-Pritchard.

Asset bubbles and debt levels have raised alarm bells about the Chinese economy but unlike earlier this year, there were fewer jitters about China's growth figures ahead of the release. Premier Li Keqiang gave markets a heads up on October 10 by saying that the country's economy had performed better than expected in the third quarter and that debt risks were under control.

"The real problem in China is that it's a finger in the dike situation," Andrew Collier, managing director at Orient Capital Research, told CNBC's Street Signs. "Western investors get consumed with policy noises while Li Keqiang and Xi Jinping are busy putting out forest fires by flooding the market with cash and negotiating defaults."

Other data

GDP wasn't the only indicator on tap for Wednesday.

For the month of September, industrial output expanded 6.1 percent on-year, below Reuters' estimates for a 6.4 percent expansion, while retail sales rose 10.7 percent on-year, a tad better than the anticipated 10.6 percent rise. Meanwhile, fixed asset investment for January-September climbed 8.2 percent on-year, in line with forecasts.

"The slip in industrial production is a sign that lends credence to the thinking that there is a liquidity trap in China. We saw 1.2 trillion yuan ($181 billion) in new loans for September, a huge increase in lending but corporates aren't spending the money despite the government's push to get state-owned enterprises to invest," commented Collier.

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