China's GDP grows 9.6% in Q3, inflation picks up

Updated: 2010-10-21 12:24
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BEIJING - China's economic growth continued to decelerate in the third quarter as the government weans the economy from the stimulus and back to normal. But rising inflation posed new challenges. [CPI rises 3.6%, PPI up 4.3% in Sept]

The gross domestic product (GDP) grew 9.6 percent in the third quarter from the same period last year, the National Bureau of Statistics (NBS) said on Thursday.

The growth rate slowed down from 11.9 percent in the first quarter and 10.3 percent in the second quarter.

From January to September, GDP increased by 10.6 percent year-on- year to 26.866 trillion yuan ($4.028 trillion), the NBS said.

"The economic performance is generally sound," Sheng Laiyun, NBS's spokesman, told a news conference.

"In the face of complicated and fast-changing domestic and international situations and challenges, China implemented the stimulus package and sped up economic restructuring. The economic turnaround has been further consolidated and is moving in the anticipated direction," Sheng said.

He said the government would keep its macro-economic policy "consistent and stable," and make it more "targeted and flexible."

"More efforts will be made to transform the economic development mode, deepen opening-up and reform, improve people's lives and ensure stable and relatively fast economic growth," he said.

In September, consumer price index (CPI), a main gauge of inflation, rose 3.6 percent year on year, up 0.6 percentage points from August. It was also the third consecutive monthly rise.

On Oct 19, China's central bank surprisingly announced it would raise the one-year deposit and lending rate by 25 basic points to tame rising inflation amid ultra-high fixed-asset prices.

Sheng said the interest rate rise will help absorb liquidity and promote economic restructuring.

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Climbing international commodity prices and the loose monetary policies of a number of countries posed challenges for the Chinese government in keeping inflation around the annual three percent target.

Domestically, runaway property prices, and frequent natural disasters which pushed up food prices, also helped fuel inflation.

Sheng said although price increase pressure still remained, it was still possible to achieve the three percent target, if the right measures were implemented for the rest of the year.

To curb China's runaway housing prices, the government has raised the ratio of mortgage downpayment for home buyers and completely halted bank lending to third-home buyers.

Sheng said speculative demands have been "prominently checked" with falling house trading in major cities. Construction of affordable housing also has picked up speed.

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