China’s economic growth slowed to 9.6 per cent in the third quarter of the year, reflecting a phasing out of the government’s $ 586 billion stimulus plan and a return to normal growth.
Analysts said the slowing down of the economy, in the short-term, could result in falling Chinese demand for overseas goods, which has played a key role in driving the global recovery. Domestic demand for resources such as iron ore — India’s biggest export to China — is expected to fall as a result of the slowing growth.
The Chinese economy recorded 11.9 per cent growth in the first quarter of the year, and 10.3 per cent in the second. The cooling down in the third quarter was driven by government measures to calm the housing market and bank lending, according to Zhu Baoliang, an analyst with the government’s State Information Centre.
Chinese officials welcomed the figures, but expressed concern over rising inflation. The consumer price index (CPI) rose for the third consecutive month, by 3.6 per cent, to a 23-month high. Food prices rose 8 per cent.
"The economic turnaround has been further consolidated and is moving in the anticipated direction," said Sheng Laiyun, a spokesman for the National Bureau of Statistics, adding that the inflation figures were due to "adverse natural conditions".
Fixed asset investments, which have largely driven China’s economy since the 2008 stimulus plan went into action, showed signs of slowing. The slowing down, analysts said, was a positive development in the long-term, as China tries to rebalance its economy and stimulate domestic consumption as a driver of growth.
"Short-term, the slowdown means China will have less demand for goods from the rest of the world," Alistair Thornton, a China analyst for IHS Global Insight, told the Associated Press. "But long-term, the slowdown could be a benefit to the world economy because the Chinese economy cannot keep going at such a high pace and in such an unbalanced way."
