China146;s Q3 growth slows

China's economy expanded by 9.1 per cent in the third quarter compared with a year earlier, marking the third consecutive quarter of slower ...

China8217;s economy expanded by 9.1 per cent in the third quarter compared with a year earlier, marking the third consecutive quarter of slower growth as Beijing reins in investment and lending.

Economists said a slew of data on Friday showed evidence of a measured slowdown in growth in the seventh largest economy that could reduce the need to raise interest rates.

But China8217;s Premier Wen Jiabao pledged at a meeting of the State Council, China8217;s cabinet, to maintain economic control measures, saying pressure on commodities prices and large scale fixed asset investment are a problem.

Other officials also gave no indication they planned to scale back credit and investment curbs, which have helped slow the pace of annual growth in GDP from 9.8 per cent for the first quarter and 9.6 per cent for the second quarter.

Zheng Jingping, National Statistical Bureau spokesman, pointed to high prices, tight energy supplies, rising inventories and the possibility of a fresh boom in investment as reasons for keeping tough economic measures in place.

8216;8216;We cannot treat these problems lightly. We should further enhance the achievements of macro-control to guard against a rebound of those problems,8217;8217; Zheng said.

China8217;s boom has fueled growth in Asia and the rest of the world and the latest evidence that country was still growing briskly helped regional stock markets on Friday, notably steel and shipping shares in Japan and South Korea. Asian currencies also gained.

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Economists said Chinese authorities would be encouraged by a dip in annual consumer price inflation to 5.2 per cent for September, down from a 7-year high of 5.3 per cent for the prior two months. Economists had forecast it would stay at that level in September.

Growth in urban fixed-asset investment slowed to 27.9 per cent for September from a year earlier. This compared with growth figures of more than 30 per cent during the first half of the year.

Government has clamped down on credit and introduced a raft of measures, such as tighter land-planning rules, to cool investment in sectors such as property, steel and cars.

8216;8216;Loosening the measures is their next step. I think they can declare victory and start to remove them.8217;8217;

WHAT NEXT?

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8216;8216;There8217;s no reason to ease the tightening measures, but maybe there is a case for tweaking them,8217;8217; said Ben Simpfendorfer, an economist with JP Morgan in Hong Kong. 8216;8216;What we want to see is a re-allocation of capital to bottleneck sectors,8217;8217; Simpfendorfer said.

Rob Subbaraman, an economist at Lehman Brothers in Tokyo noted consumption and exports were holding up. 8216;8216;As a result, the overall GDP is not slowing dramatically. It8217;s slowing at a measured pace,8217;8217; he said. 8211;Reuters