China’s economic growth stabilized, as slowdown almost bottomed out

China’s economic growth eased for the seventh straight quarter, but a slew of positive economic indicators for September have shown that China’s economy is stabilizing and the slowdown has almost bottomed out.

China’s economy has slowed for the seventh straight quarter, growing 7.4 percent year-on-year in the third quarter of 2012, the National Bureau of Statistics (NBS) announced Thursday.

The figure was lower than the 7.6-percent growth seen in the second quarter and the first quarter’s 8.1-percent growth but was still in line with economists’ predictions that third-quarter economic output would grow between 7.4 and 7.5 percent.

Despite the growth slide, NBS spokesman Sheng Laiyun said the economy has been stabilizing, especially since September, as a slew of evidence backed this, citing the trade rebound and other major economic data.

NBS data showed industrial output expanded 9.2 percent year-on-year in September, up 0.3 percentage point from August. Retail sales shot up 14.2 percent over the same period last year, and the growth rate of fixed-asset investment in the first nine months of 2012 accelerated by 0.1 percentage point compared with the rate in the first half of the year.

The purchasing managers’ index (PMI) rebounded to 49.8 percent in September from 49.2 percent in August and exports rose to a record monthly high of 9.9 percent year on year to 186.35 billion U.S. dollars.

The data echoed Premier Wen Jiabao’s remarks during recent talks on economic conditions. Premier Wen said China’s economic growth has started to stabilize and shown positive changes. China’s economy will continue to stabilize as government policies get further implemented, Wen said, expressing confidence that China can meet its official growth target of 7.5 percent for the year.

Analysts said although the growth in the third quarter still slowed, the pace was small and some indicators even increased at a faster speed, indicating China’s economy is not at risk of hard landing.

“Clearly, concerns over continued slowdown can now be put to rest,” Dariusz Kowalczyk, an analyst at Crédit Agricole in Hong Kong, said in a research note. The data, he added, confirmed “that growth is picking up and that China is not at risk of hard landing.”

“We are seeing positive factors that will drive a rebound for the economy,” said Tang Jianwei, senior finance analyst at the Bank of Communications, China’s fifth-largest lender.

Tang predicted that China’s GDP will rise 7.8 percent this year based on the nation’s growth-stabilizing efforts.

Challenged by a sluggish external market and global economic woes, China lowered its full-year growth target for 2012 to 7.5 percent in early March.

Sheng noted a “mild rebound” is possible in the fourth quarter, a view echoed by other analysts.

“Basically it’s obvious that the economy is bottoming out, and economic growth will likely be higher in the fourth quarter than the third quarter,” said Lu Ting, Hong Kong-based China economist for Bank of America Merrill Lynch.

Zhiwei Zhang, an economist at Nomura in Hong Kong, said the data sent “very positive signals” and helped “reinforce our view that growth will rebound visibly” in the fourth quarter.

The positive changes in the economy are attributed to government pro-growth measures introduced earlier this year, which include more aggressive fiscal spending, structural tax reduction, monetary loosening and state-run sectors opening to private capital.

The government has quickened the process of export tax rebates as one of the measures to stabilize trade. It has also approved a raft of investment projects to shore up growth. The central bank has lowered both banks’ reserve requirement ratio and interest rates twice this year in a bid to buoy the slowing economy.

Fan Jianping, chief economist of the State Information Center, held that the economic index for the first three quarters revealed that many positive changes have taken place in investment, consumption and exports — three main forces driving economic growth.

World Bank predicted China’s growth rate will slow to 7.7 percent this year and but will move back to 8.1 percent in 2013 — a small risk of “hard landing”.

Despite positive changes, China’s economic growth still faces challenging external environment as it is difficult to expand external demand, with lingering world financial crisis, chronic European debt crisis, sluggish American growth and lackluster growth of emerging markets.

And at the same time, trade protectionism bears new tendencies along with global economic slowdown, significant drops in corporate profits and fiscal revenue growth.

Premier Wen said China still faces considerable difficulty in the last quarter, but the government is confident to achieve the full-year economic and social development goals through hard work and efforts.

China’s inflation eased to 1.9 percent in September from 2 percent in August. Despite the lessened pressure, the country should continue to be wary, as imported inflation is likely to be caused by QE3 and loose monetary policies in the yen and euro regions.

The nation will have to continue prioritizing growth-stabilizing efforts while pushing forward economic restructuring and industrial upgrading.

Lu Hui / Xinhua