Q3 GDP fends off crisis

By Kang Juan

China's gross domestic product (GDP) grew 8.9 percent in the third quarter from a year earlier, with the annual growth rate at 7.7 percent for the first nine months – close to the government's target rate of 8 percent – according to official data released this week.

The figure for the July- September quarter, though below the average forecast of 9 percent by economists, is the highest quarterly rate in a year after growing 7.9 percent in the second quarter and 6.1 percent in the first three months – the lowest in more than a decade as exports shrank sharply.

Policies adopted by the Chinese government to fight the global financial crisis have produced significant results, and the Chinese economic growth is maintaining its "consolidated" recovery, National Bureau Statistics (NBS) spokesman Li Xiaochao said Thursday.

With a good foundation laid in the first three quarters, China will be able to achieve the 8 percent full-year growth target, which the government believes is essential to generating enough jobs, Li said.

Reuters Thursday described the fast economic rebound as "China's dragon comes roaring back."

Asia Development Bank raised its national GDP forecast for 2009 Thursday to 8.1 percent, up from 7 percent, and Credit Suisse lifted its estimate to 8.4 percent.

Ding Chun, director of the Institute of European Studies at Fudan University, told the Global Times that the 8.9 percent growth rate in the third quarter shows that the 4-trillion-yuan investment package and other stimulus measures have been very effective during the ongoing economic recovery, and it shows that China has cast off the influence of the financial crisis.

Tan Yaling, an economist with the Institute of International Finance at the Bank of China, however, noted that the economic data should be mainly interpreted by the huge investment from the government.

"The increase in industrial output of all 39 divisions in the third quarter, which has a close relation with the policy support and appreciation of raw material in the global market, isn't surprising," Tan said.

Brian Jackson, a senior strategist at Royal Bank of Canada in Hong Kong, told AFP, "the Chinese economy has taken off, but it is flying on one engine."

Jin Yanshi, chief economist at the Chengdu - based

 Sinolink Securities, argued that the significant recovery in the real economy hasn't appeared, as the producer price index, a major measure of inflation at the wholesale level, and the consumer price index, a main gauge of inflation, didn't turn positive in the first three quarters.

"The main drive for economic growth is investment in two aspects, namely the government investment in expressway construction and non-government investment in property," Jin said.

"Government investment will drive non-government-sector investment. And property investment will become a major force of non-government-sector investment. As government deficit hikes and investment slow down next year, real estate players will make the most qualified successor," Jin added.

In order to consolidate the basis of the economic recovery and realize stable growth, China will stick to its proactive fiscal policy and moderately easy monetary policy, NBS spokesman Li said.

GDP not ultimate goal

Guo Jianguang, an associate professor of finance at the Central University of Finance and Economics, told the Global Times Thursday that the potential threat for China's economic growth next year is mainly based on overseas concerns.

"The trade environment and currency rate should be paid more attention to next year," Guo said. "Domestic factors will not affect the economic growth next year as long as agricultural production maintains stability."

At the same time, however, many are starting to question just how China can break its reliance on State spending to become a more sustainable and balanced economy.

Wan Jun, a global-economy researcher at the Chinese Academy of Social Sciences, expressed cautious optimism over the economic growth spurred by government investment.

"The stimulus plan functions as a timely and strong prescription for an ailing person. As China is recovering, it is time for the nation to refocus on economic restructuring, a process that was hindered by the crisis," Wan said.

Wan emphasized that GDP growth is not the ultimate goal, as it should be overshadowed by the quality of development.

"It is useless to set up a threshold for the fourth quarter to secure the annual 8 percent growth. Maintaining growth in people's incomes, domestic consumption, as well as investments by the non-governmental sector, should be the major concerns," Wan said.

Tan also questioned the GDP-oriented development model, saying that economic growth should be based on scientific planning.

Tan said she expects the government to adjust its economic structure with the remaining funds from the stimulus package, and concentrate on promoting agriculture and small and medium-sized enterprises, in the last three months of the year.

Qiu Wei, Zhang Han and An Baijie contributed to this story
 

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