China’s economic growth slowed further in the third quarter as the European debt crisis and a weak recovery in the US economy hurt demand for its goods.
The economic grew 7.4% in the three months to the end of September compared with a year earlier, down from a 7.6% growth rate in the previous quarter.
However, other data released showed a jump in factory output, retail sales and investment in September.
Analysts said the data indicated that China’s economy may be stabilising.
“Clearly, concerns over continued slowdown can now be put to rest,” said Dariusz Kowalczyk, senior economist as Credit Agricole-CIB.
“The last month of the quarter brought acceleration of industrial output, retail sales and fixed asset investment in year-on-year terms, highlighting the fact that improvement of momentum of the economy was particularly strong in September.”
‘Rebound’
China’s growth over the past few years has been led by the success of its export and manufacturing sector, as well as by a credit-fuelled investment boom directed by the government.
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The September data indicates economic momentum has picked up strongly compared with July and August”
Zhang ZhiweiNomura
But demand for the country’s exports has slowed from key markets lately, leading to fears of a sharp economic slowdown.
However, figures released on Thursday indicated that things may be starting to pick up again.
China’s industrial production rose by a more-than-expected 9.2% in September from a year earlier. That was up from 8.9% growth in August.
Meanwhile, retail sales during the month were 14.2% higher than a year ago, signalling that domestic consumption was growing.
“The September data indicates economic momentum has picked up strongly compared with July and August,” said Zhang Zhiwei, chief China economist at Nomura in Hong Kong.
The latest numbers come after trade figures released over the weekend that showed a 9.9% year-on-year growth in exports during September, a big jump from the 2.7% growth recorded in the previous month.
Mr Zhang added the latest data “helps reinforce our view that growth will rebound visibly in the fourth quarter”.
Infrastructure
China has announced various stimulus measures in recent months aimed at boosting domestic consumption and sustaining growth.
The central bank has lowered the amount of money that banks need to keep in reserve three times in the past few months in order to increase bank lending.
China needs its consumers to radically increase their spending, explains Martin Patience
It has cut interest rates twice since June to reduce the burden on businesses and other borrowers.
Beijing has approved infrastructure projects worth more than $150bn (£94bn), aimed at spurring a fresh wave of economic development.
There had been hopes that China’s policymakers may take further measures to spur growth.
But the positive set of economic data for September may now see Beijing hold back on any major move.
“There is no room, or need, for any further major stimulus, especially a rate cut,” said Mr Kowalczyk of Credit Agricole-CIB.
However, others continue to take the view that a sharp rebound in China’s economic growth is unlikely in the near term, and that policymakers may continue to take measures to sustain growth.
“There has been a fair bit of stimulus activity that has been announced in recent months and that trend is likely to continue in the near term,” Tony Nash, managing director at IHS Global Insight told the BBC.
