China's Q3 GDP growth fastest this year, but activity may fall
By Aileen Wang and Kevin Yao ,ReutersBEIJING -- China's economy grew at its quickest pace this year between July and September in a rebound fuelled largely by investment, although signs are already emerging that the pick up in activity may lose some vigor.
October 19, 2013, 12:42 am TWN
Gross domestic product in the world's second-biggest economy rose 7.8 percent from a year earlier, official data showed, marking only the second quarter in the last 10 in which growth has accelerated.
An unexpected fall in exports in September, and easing growth in factory output and retail sales suggested the economy was already slowing down at the end of the quarter.
Authorities are also expected to cool credit growth as inflation pushes to a seven-month high, another factor analysts say will drag on economic activity.
“The growth peak was behind us in the third quarter,” said Ting Lu, an economist at Bank of America-Merrill Lynch. “We believe the People's Bank of China will slightly shift its monetary policy from a moderate expansion in the third quarter to a neutral stance.”
After three decades of double-digit growth heavily reliant on exports and investment, China is trying to shift, or “restructure,” the economic mix so that activity is geared much more to consumption, as it is in more developed countries.
But the latest figures show investment accounted for over half of the expansion so far this year, underlining the challenge Beijing faces to restructure the economy, which it hopes will provide for more sustainable growth in the future.
Reducing reliance on China's traditional growth drivers is expected to crimp the economy, although sluggish global demand has provided an added drag.
In the first nine months of the year, the US$8.5 trillion economy grew 7.7 percent from a year earlier, putting it on track to achieve Beijing's 2013 growth target of 7.5 percent, which would still be China's worst performance in 23 years.
The surprise fall in exports came after emerging market demand wilted as choppy financial markets sapped confidence, a trend the government said this week is likely to continue.
The impasse in the U.S. Congress over the government's debt ceiling could be replayed before a new Feb. 7 deadline, shaking confidence once more.
And with the yuan hitting a record high on Friday for the fifth consecutive day, Chinese exporters face the hurdle of a rising currency eroding their competitiveness.
“The economy is facing a complex and uncertain domestic and international environment,” Sheng Laiyun, a spokesman for the National Bureau of Statistics told a briefing.
“In addition, we have accumulated chronic structural imbalance problems in our economy and need to deepen reforms.”