March 28, 2024

Chinese Economy Cools Slightly in Third Quarter

BEIJING — China’s economy pulled back a bit from its pell-mell pace in the third quarter, the government said Tuesday, as measures to rein in inflation and head off speculation put a brake on growth.

The measured slowdown raised hopes among economists that the steps taken so far would bring the economy to a so-called soft landing, with moderate growth and lowered inflation, instead of a steep decline.

Some analysts remained worried, however, that the European Union’s debt crisis could lead to a sharp drop in Chinese exports, placing China’s economy at greater risk.

The National Bureau of Statistics said gross domestic product had grown 9.1 percent in the quarter, compared with growth in the same period last year, and down from 9.5 percent in the previous three months. That was slightly below consensus forecasts and made the quarter the fourth in a row in which G.D.P. growth had declined.

Year-to-date growth averaged 9.4 percent, basically unchanged from the first half of 2011.

Despite the economy’s slower pace, industrial production continued to rise. It was up 13.8 percent in August over the previous year, compared with 13.5 percent in July. Real estate sales jumped 17.7 percent over August a year ago.

Measured over the quarter, however, industrial production was basically flat, another sign of cooling growth.

The statistics bureau said in a statement that the economy had “generally carried good development weight and kept moving towards the expected direction of macroeconomic control.”

Some analysts were less sanguine.

“While relatively robust headline growth may provide some comfort to Chinese policy makers, some leading indicators show continued downside pressure,” Alastair Thornton of ISB Global Insight in Beijing wrote in a note on the data.

Most notably, he said, surveys of purchasing managers pointed to “sharply deteriorating demand” for Chinese exports, which remain the foundation of the economy.

In an interview, Mr. Thornton said growing problems in Europe, China’s largest trading partner, could shock the Chinese economy, no matter what the government does. But the greater threats, he said, are medium-term problems, including over-investment in some types of real estate, mounting local government debt and an essentially unregulated shadow banking system.

“Domestically speaking, I think China’s pretty safe for the next year or so,” he said.

China’s economic planners have been trying for months to cool down an economy that many experts said was at risk of becoming dangerously overheated. In the past year, the government has raised interest rates five times, restricted the number of homes a purchaser can buy and curbed bank lending in an effort to brake growth.

Inflation has remained stubbornly high, despite those and other measures, and consumers have been hit especially hard by skyrocketing food prices. But most analysts say they believe price increases will moderate with slowing economic growth and an increase in food supplies from the autumn harvest.

China’s stock markets fell on the news and on fresh worries about the European debt crisis. The Shanghai composite index closed 2.3 percent lower, and in Hong Kong, the Hang Seng index had slumped more than 4 percent by late afternoon.

Article source: http://www.nytimes.com/2011/10/18/business/chinese-economy-cools-slightly-in-third-quarter.html?partner=rss&emc=rss

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