OT on China growth...
China's GDP grows 9.1% in third quarter
By James Kynge in Beijing
Published: October 17 2003 13:30 | Last Updated: October 17 2003 13:30
China's gross domestic product grew by 9.1 per cent in the third quarter of this year, a figure that many economists think both understates reality and deepens concern that the world's fastest growing economy is overheating.
Overall growth in the first nine months of the year rose to 8.5 per cent, putting China on course to far exceed the official GDP target of "about 7 per cent" for 2003 despite the damping effects of an epidemic of severe acute respiratory syndrome, the National Bureau of Statistics said.
However, an emerging consensus of independent economists think the official figures indicate little more than a trend. In reality, they say, China is growing at around 11 or 12 per cent, driven by an investment boom that has caused overheated demand for iron ore, steel, coal, aluminium, zinc and several other commodities.
"These figures confirm that China does have a serious over-investment problem," said Qu Hongbin, China specialist at HSBC in Hong Kong and one of several economists who thinks the official figures significantly understate growth.
China's expansion has been driven primarily by fixed asset investments, which rose by 30.5 per cent to Rmb3,440bn ($416bn) in the first nine months - a level of activity not seen since the country last overheated in 1994. There is concern that just as in the years after 1994, the current investment trend will tail off next year.
Already, there are signs of moderation. In September, fixed asset investment grew by 26.5 per cent over the same month a year earlier. Economists said the slight easing could have been in response to recent government measures to tighten credit, cool the residential property market and halt work on some 3,800 planned industrial parks.
Mr Qu sees fixed asset investment growth slowing further in coming months, perhaps rising by only 15 per cent in 2004. An adjustment of this kind would have an important damping effect on China's red hot demand for metals and other raw materials, and on international shipping freight rates which were recently driven to record levels by Chinese demand.
"I think the party would be over (for exporters of raw materials to China)," Mr Qu added.
Nevertheless, despite signs of overheating in property, cement, steel, aluminium, coal and possibly the car sector, it was also clear that demand - driven to a significant extent by a boom in consumer lending - was picking up.
Retail sales in the third quarter increased 9.7 per cent from a year earlier, rebounding from a slowdown in the second quarter, when retail sales rose just 6.7 per cent as consumers stayed at home for fear of catching the Sars virus.
Demand for cars remained torrid, climbing 77.5 per cent, while sales of communications equipment rose 74 per cent, oil products 39 per cent and housing 36 per cent.
Although inflationary pressures remain subdued, allowing the central bank to maintain a relatively easy monetary policy, the consumer price index showed a firming trend. In September it was at 1.1 per cent, compared with the 0.7 per cent average for the first three quarters. |
