China economic growth slows down to 9.6 pc in Jul-Sep quarter

Last Updated : 21 October 2010, 13:48 IST
Last Updated : 21 October 2010, 13:48 IST

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The growth rate slowed down from 11.9 per cent in the first quarter and 10.3 per cent in the second quarter of 2010.From January to September, GDP increased by 10.6 per cent year-on-year to 26.866 trillion yuan (about USD4.02 trillion), China's National Bureau of Statistics (NBS) said today.

The slowdown was seen as an offshoot of withdrawal of over USD 586 billion stimulus measures brought out in November 2008 to insulate the economy from the global downturn.

Analysts here said access to credit has been curbed and public spending on infrastructure scaled back as part of stimulus withdrawal.The news of slowdown of the world's fastest growing economy came as the ruling Communist Party approved a new five-year plan to be implemented from next year to change China's growth model from export driven to the one based on domestic consumption.

"The economic performance is generally sound," NBS spokesman Sheng Laiyun told reporters here.

"In the face of complicated and fast-changing domestic and international situations and challenges, China implemented the stimulus package and sped up economic restructuring. The economic turnaround has been further consolidated and is moving in the anticipated direction," Sheng said.

"More efforts will be made to transform the economic development mode, deepen opening-up and reform, improve people's lives and ensure stable and relatively fast economic growth," he said.

In September, the consumer price index (CPI), a main gauge of inflation, rose 3.6 per cent year on year, a 23-month high. It was also the third consecutive monthly rise.
On October 19, China's central bank surprisingly announced that it would raise the one-year deposit and lending rates by 25 basis points to tame rising inflation amid ultra-high fixed-asset prices as the inflation crossed the danger mark of 3.5 per cent.
Sheng said the interest rate rise will help absorb liquidity and promote economic restructuring.

Rising international commodity prices and the loose monetary policies of a number of countries posed challenges for the Chinese government in keeping inflation around the annual three per cent target.

Domestically, runaway property prices, and frequent natural disasters which pushed up food prices, also helped fuel inflation. Sheng said although price increase pressure still remained, it was still possible to achieve the 3 per cent target, if the right measures were implemented for the rest of the year.

To curb China's runaway housing prices, the government has raised the ratio of mortgage down payment for home buyers and completely halted bank lending to third-home buyers.

Sheng said speculative demands have been "prominently checked" with falling house trading in major cities. Construction of affordable housing also has picked up speed.
Industrial value-added output year-on-year growth slowed to 13.3 per cent in September from 13.9 per cent in August, as a result of a higher comparison basis, and high energy-consuming manufacturers' production scaled down.

In the first nine months, fixed asset investment rose 24 per cent year on year, retail sales increased 18.3 per cent.Sheng said despite the sound momentum, much hard work and realistic thinking was still needed as the economy was at a crucial transition point.

Published 21 October 2010, 13:48 IST

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