Stimulus sees China growth rebound
China's economic growth accelerated for the first time in three quarters, as Premier Li Keqiang spurred factory output and investment to meet the government's expansion goal for 2013.
Gross domestic product rose 7.8 per cent in the July-September period from a year earlier, the National Bureau of Statistics said. Industrial production advanced in September by 10.2 per cent, while retail sales gained 13.3 per cent.
The pick-up reflects Premier Li's implementation of what Bank of America called a "mini fiscal stimulus", including railway spending and tax cuts, to support the world's second-largest economy.
The figures also showed home sales jumped 34 per cent in September from the previous month even amid restrictions aimed at preventing a bubble, adding to signs of imbalances that may cast doubt on the recovery's staying power.
"There's no question China can achieve this year's growth target of 7.5 per cent," said Zhu Haibin, chief China economist at JPMorgan Chase. Even so, the "recovery momentum is not likely to last long", he said, citing relatively weak emerging markets, the yuan's appreciation and a cooling in manufacturing investment.
"We expect the fourth quarter will continue to be quite decent growth but moderate a little bit." Premier Li said last week that growth in the first nine months exceeded 7.5 per cent. He said this week that China's recovery would continue and the nation was able to meet this year's targets.
"The new government under Premier Li Keqiang will prevent further quickening of credit growth, will choose not to further expand its mini fiscal stimulus and will likely tone down their pro-growth rhetoric," Lu Ting, head of Greater China economics at Bank of America said.
At the same time, it's unlikely that Mr Li will "noticeably slow credit growth and cut fiscal spending in the near term", Mr Lu wrote.
Fixed-asset investment excluding rural households, a key force behind growth, grew 20.2 per cent in the first nine months of the year, compared to a 20.3 per cent pace in the January-August period.
The Communist Party meets next month to discuss rolling out policies that might hurt growth temporarily while putting expansion on a stronger long-term footing.
Next month's gathering will be the third full meeting of the party's Central Committee, including President Xi Jinping, Premier Li, ministers and the heads of the biggest state companies and banks. It was at such a third plenum in late 1978 that Deng Xiaoping and his allies inaugurated a series of reforms that began to open up China to foreign investment and loosen state controls over the economy.
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