10/17/2011 10:05 EDT | Updated 12/17/2011 05:12 EST

China's economic growth slows to 9.1 per cent in latest quarter amid government controls

BEIJING, China - China's rapid economic growth eased in the latest quarter to a still-robust 9.1 per cent amid government efforts to prevent overheating.

Growth of the world's second-largest economy in the three months ending in September was down from the previous quarter's 9.5 per cent, data showed Tuesday. The government said that was in line with plans to steer growth that hit 10.3 per cent last year to a more sustainable level and cool politically dangerous inflation.

The moderation comes amid Europe's debt crisis and high U.S. unemployment and might reduce China's contribution to global growth, though analysts say its expansion cannot shore up a slumping world economy on its own.

"This means China itself is still growing well and will continue to generate demand for commodities and exports," said Darius Kowalczyk, senior economist for Credit Agricole CIB in Hong Kong. Still, he said, "I don't think they are going to save the world."

Beijing has repeatedly hiked interest rates and imposed curbs on construction and other investment to prevent runaway growth and cool inflation that surged to a 37-month high of 6.5 per cent in July. It has promised to ease some bank lending curbs to help struggling small businesses but analysts expect it to maintain most of its controls.

A government spokesman said the latest data, which also showed strong retail sales and factory production, showed Beijing's strategy was working and the economy was on the right track.

"There is quite a strong possibility for China's economy to maintain steady and relatively fast growth," said a spokesman for the National Statistics Bureau, Sheng Laiyun, at a news conference.

Sheng warned China faces "rising risks" due to weakness in key U.S. and European export markets. But he said it is unlikely to suffer a "double dip," or relapse into an economic slump.

China is forecast to account for about one-third of global growth this year. But analysts caution that its consumption and investment are too small to offset lower U.S. and European demand. Its multibillion-dollar trade surplus also limits benefits for its trading partners.

Deutsche Bank economist Ma Jun has estimated that China would have to grow by 18 per cent this year to make up for a 3 percentage point drop in U.S. and European growth.

The International Monetary Fund is forecasting China's growth this year at 9.5 per cent, compared with just 1.5 per cent for the United States and a 0.5 per cent contraction for Japan, East Asia's other economic giant.

China's retail sales rose 17 per cent in September, slightly ahead of the growth rate for the first half of the year, data showed. Factory production rose 14.2 per cent over a year earlier for the quarter.

China's exporters have been hurt by weak global demand that saw September export growth tumble to 17.1 per cent from August's 24.5 per cent. But Sheng said retail sales and other indicators showed the communist government's efforts to reduce reliance on trade by boosting domestic consumption were gaining traction.

Premier Wen Jiabao promised last weekend to help exporters by maintaining a "stable exchange rate," a move that might fuel tensions with Washington over Beijing's currency controls.

China's inflation eased to 6.1 per cent in September, though food price inflation held steady at August's level of 13.4 per cent. Analysts expect inflation to ease further as the autumn harvest comes in.

China's demand for iron ore, industrial components and other foreign goods already has eased as the government clamped down on a construction boom. Export-driven manufacturers that account for half of the country's imports have reacted to lower orders by cutting purchases of supplies.

Imports of polyester fell 21.7 per cent in September from a year earlier while imports of unrefined aluminum declined 7.9 per cent, according to customs data. Growth in oil imports declined from last year's double-digit rates to 4 per cent.

Weaker Chinese demand is likely to hit other Asian economies that supply its factories industrial components, as well as Australia, Chile and other exporters of minerals such as iron ore and copper.

"China will contribute a significant portion of global growth," said Mark Williams of Capital Economics in London. "But it's a separate issue whether China contributes to growth in the world outside China, and that really depends on whether it can bring its trade surplus down."


National Bureau of Statistics (in Chinese):