According to today's announcement by the Chinese National Statistics Office, the Chinese economy grew by 9.6% year-on-year in the third quarter of 2010, based on preliminary estimates. This is the first time since the third quarter of 2009 that GDP growth "only" reached single figures. Investments once again spurred the economy on, although, even in this regard, economic momentum was somewhat less dynamic than it had been in previous quarters.
China: Economy in robust fettle
The Chinese government is certainly not adverse to more moderate economic activity. As early as this spring, it embarked upon a gradual exit strategy from the stimulus programs it had launched to combat the economic crisis. In addition the government is driven by fears that several sectors of the economy might be prone to overheating. It is currently in the process of trying to curb the very brisk activity in the real estate sector and to limit bank lending. These measures are now biting, thus dampening growth. Soon the same will hold true for Chinese monetary policy. Responding to inflation rates of more than 3%, the Chinese central bank only recently hiked its key interest rates for the first time in three years. Further steps are expected to follow over the coming months.
Current economic indicators suggest that the robust economic development in China is set to continue. However, the trend towards more moderate rates of growth is likely to persist in the fourth quarter. Our forecast of 10% growth in GDP this year therefore remains unchanged.
Gregor Eder
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