Moderate Chinese slowdown shows growing dependence on world: analysts Beijing (AFP) Oct 25, 2007 China's economy expanded at a blistering pace in the third quarter, the government said Thursday, even as it declared the immediate overheating risk had receded thanks to a series of control measures. The world's fourth-largest economy grew by 11.5 percent in the third quarter and the first nine months of 2007, compared with the same periods a year earlier, the National Bureau of Statistics said. "We have prevented the economy shifting from speedy growth to overheating," bureau spokesman Li Xiaochao told a briefing. "Bottleneck problems have been eased." As evidence of a slight slowdown, Li pointed out that economic growth in the second quarter had been 11.9 percent, while inflation in September was 6.2 percent, down from 6.5 percent in August. However, concerns lingered about possible policy responses to the growth data, with Shanghai stock prices closing the day 4.80 percent lower as investors worried about monetary tightening. "Despite the modest moderation in activity growth and inflation, they remain above the comfort zone for policymakers," said Goldman Sachs economist Hong Liang in a research note. "We expect the central bank to continue to depend on credit rationing as its main policy tool." No matter what the government does, China is all but certain to experience its fourth consecutive year of double-digit growth in 2007 and is expected to soon overtake Germany as the world's number three economy. "Overtaking Germany is just a matter of time given such a growth rate," said Huang Yiping, a Hong Kong-based economist with Citigroup. Investment spending remained the major driver of economic growth, accounting for more than 40 percent of the increase in the gross domestic product in the first nine months, Li said. The bureau confirmed that fixed-asset investments expanded by 25.7 percent in the first nine months of 2007 from the same period a year ago. The figure marked a wafer-sized easing from the first half of the year, when investments in fixed assets were up 25.9 percent. Fixed-asset investments cover mostly state-controlled enterprises' spending on plant and equipment, a major source of growth in the world's fourth-largest economy. Only Wednesday, Premier Wen Jiabao called for more curbs on investment and credit, signalling that the government believed more needed to be done to keep the economy under control. But economists said this was not a sign of panic among China's policy makers. "We don't have to slow down the economic growth, we just need to keep it from growing faster, which is overheating," said Feng Yuming, an economist with Orient Securities. "The government has been calling for control on investment since 2003, it's not the first time the goverment said so. If they didn't say those words, the investment growth would go wild." Industrial output expanded by 18.5 percent in the first three quarters of 2007, while in the month of September alone it was up by 18.9 percent from a year earlier, the bureau said. Industrial production is driven partly by booming exports, reflected in a trade surplus of 185.7 billion dollars in the first nine months of the year. Retail sales in the first nine months of the year were 15.9 percent, with a rise of 17 percent in the month of September alone, the bureau said. China has hiked the interest rate five times so far this year and has repeatedly ordered banks to increase the amount of money they place in reserves, in order to rein in the liquidity-driven boom. "These measures are all dependent on the market, so they need some time to really take effect," said Qi Jingmei, an economist with the State Information Center, a government think tank. "The impact will not happen overnight. It's not as simple as in the past," she said, referring to earlier generations of policy makers who could simply order factories to stop production.
China's economy grows 11.5 percent in third quarter The world's fourth-largest economy grew by 11.5 percent in the third quarter and the first nine months of 2007, compared with the same periods a year earlier, the National Bureau of Statistics said. "We have prevented the economy shifting from speedy growth to overheating," bureau spokesman Li Xiaochao told a briefing. "Bottleneck problems have been eased." As evidence of a slight slowdown, Li pointed out that economic growth in the second quarter had been 11.9 percent, while inflation in September was 6.2 percent, down from 6.5 percent in August. However, concerns lingered about possible policy responses to the growth data, with Shanghai stock prices closing the day 4.80 percent lower as investors worried about monetary tightening. "Despite the modest moderation in activity growth and inflation, they remain above the comfort zone for policymakers," said Goldman Sachs economist Hong Liang in a research note. "We expect the central bank to continue to depend on credit rationing as its main policy tool." No matter what the government does, China is all but certain to experience its fourth consecutive year of double-digit growth in 2007 and is expected to soon overtake Germany as the world's number three economy. "Overtaking Germany is just a matter of time given such a growth rate," said Huang Yiping, a Hong Kong-based economist with Citigroup. Investment spending remained the major driver of economic growth, accounting for more than 40 percent of the increase in the gross domestic product in the first nine months, Li said. The bureau confirmed that fixed-asset investments expanded by 25.7 percent in the first nine months of 2007 from the same period a year ago. The figure marked a wafer-sized easing from the first half of the year, when investments in fixed assets were up 25.9 percent. Fixed-asset investments cover mostly state-controlled enterprises' spending on plant and equipment, a major source of growth in the world's fourth-largest economy. Only Wednesday, Premier Wen Jiabao called for more curbs on investment and credit, signalling that the government believed more needed to be done to keep the economy under control. But economists said this was not a sign of panic among China's policy makers. "We don't have to slow down the economic growth, we just need to keep it from growing faster, which is overheating," said Feng Yuming, an economist with Orient Securities. "The government has been calling for control on investment since 2003, it's not the first time the goverment said so. If they didn't say those words, the investment growth would go wild." Industrial output expanded by 18.5 percent in the first three quarters of 2007, while in the month of September alone it was up by 18.9 percent from a year earlier, the bureau said. Industrial production is driven partly by booming exports, reflected in a trade surplus of 185.7 billion dollars in the first nine months of the year. Retail sales in the first nine months of the year were 15.9 percent, with a rise of 17 percent in the month of September alone, the bureau said. China has hiked the interest rate five times so far this year and has repeatedly ordered banks to increase the amount of money they place in reserves, in order to rein in the liquidity-driven boom. "These measures are all dependent on the market, so they need some time to really take effect," said Qi Jingmei, an economist with the State Information Center, a government think tank. "The impact will not happen overnight. It's not as simple as in the past," she said, referring to earlier generations of policy makers who could simply order factories to stop production. Community Email This Article Comment On This Article Related Links China News from SinoDaily.com
What China Will Want: The Future Intentions Of A Rising Power Washington DC (SPX) Oct 24, 2007 Uncertainty over China's future strategic goals is pervasive in policy circles today. But while China's growing influence has profound consequences for the international system, understanding the ideas embraced by China's leadership about its foreign policy goals is essential to predicting future Chinese intentions. So concludes new research by political scientist Jeffrey W. Legro (University of Virginia) that appears in the September issue of Perspectives on Politics, a journal of the American Political Science Association. |
|
The content herein, unless otherwise known to be public domain, are Copyright 1995-2007 - SpaceDaily.AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by SpaceDaily on any Web page published or hosted by SpaceDaily. Privacy Statement |