The Chinese economy is expected to cool down in the third quarter as the government plans to reduce stimulus measures, thus lowering inflation expectations, says a media report.

The gross domestic product (GDP) would grow by 9.2 per cent in the third quarter as compared to the same period last year, the State Information Centre, a Chinese government think tank said in its quarterly economic review.

Annual inflation would grow at around 3 percent, it said.

The world’s third largest economy expanded at 10.3 per cent year-on-year in the second quarter, slower than the 11.9 per cent growth in the first quarter and the 10.7 per cent growth in last quarter of 2009.

The moderate growth has been welcomed by economists, as they said the rate is more sustainable and would help accelerate economic restructuring and prevent overheating, newswire Xinhua reported today.

The SIC report noted consumer spending would remain robust in the third quarter boosted by wage increases and government subsidies on home appliance purchases.

However, slower housing sales following the government’s tightening of the real estate industry would hold back consumer spending to a certain extent, it said.

The cooling property market also made investors less anxious about inflation, the report added.

Besides, hike in banks’ deposit reserve ratio and tighter lending rules served to drain liquidity and stem inflation.

The report noted consumer prices would increase at a moderate pace in the latter half of the year, but unstable food prices due to the extreme weather and labour shortages in some regions, would add uncertainty.

China’s 2010 annual economic growth target is around 8 percent.

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