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China economy expands by only 7.4%, but data point to pick-up

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

The 7.4-percent 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 percent in the previous quarter.

Positive indicators for September, however, 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 “signs that the national economy is stabilizing 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 stabilizing over the past three months and should meet Beijing's 2012 goal of 7.5 percent growth.

The third-quarter result lowered growth for the first nine months to 7.7 percent, 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.

September data also released Thursday by the statistics bureau showed industrial production rose 9.2 percent year-on-year in September, from 8.9 percent in August.

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

Shanghai's composite stock index closed 1.24 percent higher after the news.

China's economy grew an annual average of more than 10 percent in the decade through 2010 but has slowed since early last year on broader global woes.

The business climate index, a gauge of corporate sentiment, fell 4.1 points to 122.8 in the third quarter from the second due to weakening external demand and overcapacity within the country, the NBS said later Thursday.

A reading above 100 means companies are optimistic about the economy while anything below 100 reflects pessimism.

The figures come just weeks ahead of a sensitive Communist Party congress that opens on November 8 and will select a new slate of leaders to take control of the world's number-two economy for the next 10 years.

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A vendor sells vegetables in a market in Shanghai on Thursday, Oct. 18. China said on Thursday that its economy grew 7.4 percent in the third quarter of this year, slowing for a seventh-straight quarter and underscoring its deepest slump since the global financial crisis. (AFP)

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