BEIJING (AFP) - China's growth rate slowed slightly in the third quarter, according to figures, suggesting that government efforts to cool the economy are having some but possibly not enough of an impact.
For the three months to September, the economy grew 9.1 percent compared with a year earlier, after recording 9.8 percent in the first quarter and 9.6 percent in the second, the National Bureau of Statistics (NBS) said.
Growth for the nine months to September was 9.5 percent, only slightly lower than the 9.7 percent rate in the first half of the year, the NBS said.
"Overall, I think (it) still represents very strong growth despite the tightening policies introduced," said Citigroup economist Huang Yiping.
"I don't think the situation has changed very significantly," said Huang, adding that restrictions on bank lending and other administrative measures taken by Beijing have "obviously have had some success."
To restrain runaway growth, Beijing began from late last year to impose a series of lending curbs on overheated sectors of the economy such as construction, steel and autos.
Friday's figures, which fell within the range of economists' expectations, meant the immediate risk of the economy running ahead of itself had been brought to heel, NBS spokesman Zheng Jingping said.
"In the first three quarters of this year, due to the further enhanced and improved macro-control measures, some unstable and unhealthy factors existing in economic life have been put under control," Zheng said.
"The series of measures adopted by the central government in strengthening and improving macro-control this year are correct and necessary, and have achieved significant results," he added.
Investors reacted positively to the data, with Chinese share prices closing 1.45 percent higher as the Shanghai A-share Index gained 19.91 points to 1,394.61.
Yet while there were some positive signs the breakneck expansion in Asia's second largest economy has been slowed, it is still racing far ahead of the official 2004 target of about seven percent.
Fixed-asset investment, a crucial measure of how much is being spent on major infrastructure projects and which was one of the first to show serious signs of excess, was up 27.7 percent to 4.51 trillion yuan (530 billion dollars) for the nine months to September.
That figure compared with 30.5 percent in the first nine months of 2003 but was at least down sharply from 43 percent in the first quarter of this year and 28.6 percent in the first half.
"It indicates a significant slowdown from earlier," Huang said, adding: "It is an encouraging sign towards a soft landing in the economy."
Zheng warned, however, that Beijing would have to remain vigilant for signs of a re-acceleration as many fundamental issues in supply and demand, pricing and investment imbalances had not been resolved.
Investment continues to be a worry and "the incentive for excessive investment is still there."
Moreover, inflation remained high.
Prices rose 4.1 percent in the nine months period and hit 5.2 percent in September alone, compared with 5.3 percent in August and July.
For the First-half, prices were up 3.6 percent, compared with a rise of 2.8 percent in the first three months of the year.
While the September headline figure was not of great concern to economists, largely due to expected higher food and oil prices, an undercurrent of non-food inflation was signalling higher costs in manufacturing, they said.
"It doesn't change the basic story that we're in for a higher price environment," JP Morgan economist Ben Simpfendorfer said.
"Expect to see some decent-sized monthly CPI (consumer price index) figures in the coming months, in the range of four to five percent."
Meanwhile, China's factories continue to churn out products, with output up 17 percent, compared with a rise of 17.7 percent in the first half.
10/22/2004 - 11:58 GMT - AFP