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China's GDP Growth Slows, But Remains Robust

  • Peter Simpson

An investor walks past the stock price monitor at a private securities company in Shanghai, China, 21 Oct 2010

An investor walks past the stock price monitor at a private securities company in Shanghai, China, 21 Oct 2010

China's economic growth remained strong in the third quarter, though the pace slowed from earlier this year. The government's primary concern - inflation - edged slightly higher, suggesting the world's second-largest economy remains buoyant and has not begun to overheat.

Economic growth for July through September fell to 9.6 percent in China, down from 10.3 percent in the second quarter.

Sheng Laiyun, a spokesman from China's National Bureau of Statistics, says the figures show a year-on-year increase of 10.6 percent, 2.5 percentage points higher than the same period last year.

The figures show the Chinese economy remains strong, and despite fears from many economists, is far from overheating.

The consumer price index rose 3.6 percent in September, up slightly from 3.5 percent in August. However, it remains well above the target for the year of 3 percent.

On Tuesday, the central bank raised interest rates, in a move many economists say was intended to gently cool the economy and get a firm grip on inflation.

The Chinese economy peaked in the first quarter, when it expanded by an annual 11.9 percent.

Jinny Yan, an economist Standard Chartered Bank, says she is happy to see that the Chinese economy is not overheating.

"A 9.6 percent growth is in our view much more sustainable and we think it is a healthy growth pace compared to the first quarters of this year," she noted. "What it means is that the economy has now stabilized. It has recovered. Now it is more about concentrating on the other risks, for example inflation or asset price inflation in the economy."

The interest rate increase and the slowing growth may ease pressure from overseas for China to allow its currency to appreciate.

Several countries, including the United States, complain that China's yuan is kept unfairly weak to give Chinese exports a market advantage. China says it will gradually adopt a more flexible exchange rate policy, to keep its economy growing, but the yuan has strengthened only about 2.5 percent in recent months.

Many economists and international policy analysts have said they expect China to face new demands about the yuan when the leaders of the Group of 20 leading economies meet next month.