Beijeng, October 22: China’s economic growth picked up last quarter as expected as a combination of breakneck investment and buoyant bank lending more than made up for a slump in exports.
But the 8.9 percent growth rate fell short of some of the more optimistic predictions in the market, and the government promptly said it would stick to the ultra-loose policies it has been following for the past year.
Andy Rothman, a macro strategist for brokerage CLSA in Shanghai, described the figure as strong but not strong enough to trigger a policy tightening, which he said was unlikely until the second half of 2010 at the earliest.
“China has begun, however, to implement its ‘exit strategy’, which is a gradual reduction in the level of stimulus (credit and infrastructure spending) in response to rising private investment and consumption,” Rothman said in a note to clients.
Last quarter’s year-on-year growth exactly matched the forecast of a Reuters poll and was up from 7.9 percent in the April-June period and just 6.1 percent in the first three months of 2009 in the depths of the global downturn.
Goldman Sachs said quarter-on-quarter growth had in fact slowed to around 10.2 percent from the second quarter’s annualized pace of 16.5 percent.
But with GDP expanding 7.7 percent in the first nine months, the government said it would now easily reach its target of 8 percent average growth for the year as a whole, widely regarded as the minimum needed to keep a lid on unemployment.
“We can say with certainty that achieving 8 percent GDP growth this year is completely assured. Without doubt,” said Li Xiaochao, the spokesman of the National Bureau of Statistics, which released the figures.
Li, though, quickly reaffirmed the policy status quo.
“We have stressed a proactive fiscal policy and appropriately relaxed monetary stance to keep consistency and stability in economic policy — according to my understanding, that means no change in policy,” he said, restating the thrust of a cabinet statement issued on Wednesday.
A breakdown of growth so far this year showed just how effective Beijing’s 4 trillion yuan ($585 billion) pump-priming package has been in galvanizing investment and putting the once-fanciful 8 percent growth goal target easily in reach.
Capital spending contributed 7.3 percentage points to headline growth of 7.7 percent in the first three quarters, while consumption accounted for 4.0 percentage points. Net exports, meanwhile, subtracted 3.6 percentage points.
—Agencies