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Thursday, October 25, 2007

China GDP Growth Maintains its pace.

China’s economy maintained its rapid growth in the third quarter, expanding by 11.5 per cent, leaving it on track to grow by its fastest annual rate since the 13.1 per cent pace achieved in 1993.The third quarter represented a slightly slower pace than the second quarter, when output rose by 11.9 per cent.

The marginally slower pace was largely due to a series of government tightening measures, including successive interest rate rises, directives to state banks to cool lending and tighter enforcement of environmental rules.

Even with the slower pace in the third quarter, the central government’s tightening measures are expected to continue until at least the end of this year.

The National Bureau of Statistics, which released the growth figures on Thursday, confirmed a disclosure by a senior official last week that annual consumer inflation slowed to 6.2 per cent in September from 6.5 per cent in August. Inflation is still more than double the central bank's annual target of 3 percent and higher than the key one-year deposit rate of 3.87 percent, encouraging speculation in stocks and property.

The benchmark CSI 300 Index of stocks fell the most in six weeks on speculation that the central bank will raise interest rates for the sixth time this year, curbing company earnings. President Hu Jintao is trying to tame the flow of cash into the economy from record exports without triggering a sudden slowdown.

The yuan rose to as much as 7.4834 versus the dollar from 7.4926 yesterday, heading for the biggest weekly gain in five weeks. It has climbed more than 10 percent versus the U.S. currency since the end of a fixed exchange rate in July 2005 and fallen 7 percent against the euro.

China's trade surplus surged 69 percent in the first nine months from a year earlier to $185.7 billion, topping the record total for all of 2006 and fueling investment. Factory and property spending in urban areas climbed 26.4 percent, the statistics bureau said today. That's up from the 24.5 percent pace for all of 2006.

Investment accounted for 42 percent of GDP growth in the first nine months, versus the 37 percent share for domestic consumption, the statistics bureau said, while ``External demand'' accounted for 21 percent.

Industrial production increased 18.9 percent in September from a year earlier, the fastest pace in three months and up from 17.5 percent in August. Retail sales climbed 17 percent after gaining 17.1 percent.

A spokesman for the National Bureau of Statistics said at a press conference announcing the latest growth figures that the “institutional, systemic and structural problems existing in economic performance are still pronounced.”

“These problems include rapid economic growth, price rises, high pressure on energy consumption and pollutant emission reduction, and the uncertainty of world economic growth.”

According to the office,China has taken six years to achieve 40 percent of a 20-year target of quadrupling per-capita GDP by 2020, with an increase to 16,084 yuan this year.

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