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BEIJING: China said Wednesday that massive government spending was paying off as a new wave of data showed the world's third-largest economy continued to strengthen, following the worst global crisis in decades.
Industrial production and retail sales picked up pace in October, while demand for Chinese exports improved, official data showed, putting the government's growth target of eight per cent well within reach for 2009.
"Based on the October data, we have more reason to believe that the foundation for and confidence in achieving the full-year growth target have further strengthened," Sheng Laiyun, spokesman for the National Bureau of Statistics, told a news conference.
Beijing sees eight per cent growth as essential for job creation and keeping a lid on social unrest in the country of 1.3 billion people.
Analysts said the data confirmed China's recovery was on track.
"The recovery appears to be broadening, with the drivers of economic growth shifting from stimulus-driven infrastructure projects to private investment and the improvement in exports," said Jing Ulrich, a Hong Kong-based economist with JP Morgan.
China's industrial output, which shows activity in the millions of factories and workshops around the country, expanded by 16.1 per cent in October from a year ago.
Exports fell 13.8 per cent to US$110.76 billion on-year in October - the best result since exports dropped by 2.8 per cent in December 2008 as the worldwide crisis began to set in.
Retail sales - the main measure of consumer spending, which the government sees as a key factor in boosting the economy - rose 16.2 per cent in October from a year ago, up from 15.5 per cent in September.
"I think the contribution of consumption to economic growth will continue to rise because we can expect a consumption boom before the new year and the Chinese new year," Sheng told reporters.
Fixed-asset investment in urban areas rose 33.1 per cent in the January to October period, the statistics bureau said, after growing 33.3 per cent in the first three quarters of 2009.
The nation's consumer price index, the main gauge of inflation, fell 0.5 per cent in October compared with the same month a year earlier, after falling 1.1 per cent in the first nine months of the year.
New Chinese bank loans dropped to 253.0 billion yuan (US$37.1 billion) in October, the lowest monthly level since the beginning of the year, the central bank said.
The pace slowed after regulators told banks to rein in loan activity and step up risk management, while seasonal factors following the lending spree in the first half of year also played a role, economists said.
While the data was positive, some analysts warned the recovery was still too closely linked to the government's four-trillion-yuan (US$586-billion) stimulus package unveiled a year ago and the massive bank lending.
"China's recovery has extended into the fourth quarter and this momentum looks set to continue into 2010," said Brian Jackson, a Hong Kong-based strategist at the Royal Bank of Canada.
"Growth is still heavily reliant on policy stimulus, easy liquidity and government-directed investment, but we expect to see stronger external demand in the months ahead."
Ben Simpfendorfer, an economist at Royal Bank of Scotland in Hong Kong, said the heavy industrial manufacturing sector - cars and metals - was leading the recovery thanks to government spending.
"This profile can be sustained through the first half of 2010," Simpfendorfer said.
"However the recovery remains unbalanced ... What we are looking for is the recovery to broaden," he said, sounding a less bullish note than Ulrich.
Policymakers and analysts have expressed increased confidence in China's recovery since the economy grew 8.9 per cent in the third quarter - the fastest pace in a year.
That compares with 7.9 per cent growth in the second quarter and 6.1 per cent in the first three months, the slowest pace in more than a decade.
The World Bank last week raised its 2009 growth forecast for China to 8.4 per cent, following similar moves by the International Monetary Fund and the Asian Development Bank.
- AFP/yb
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