Beijing/Brussels (China Daily/ANN) - The worst may be over as the economy shows signs of bottoming out, officials and analysts said despite GDP growth hitting 7.4 per cent in the third quarter, a low of more than three years.
Premier Wen Jiabao said on Wednesday at an executive meeting of the State Council that "growth has started to stabilise amid positive changes in the third quarter".
Domestic stock markets reacted to the remarks by rising to a five-week high yesterday. The benchmark Shanghai Composite Index jumped 1.2 per cent to 2,131.69.
The economy is on track to achieve its annual GDP growth target of 7.5 per cent, Wen said.
GDP growth was 8.1 per cent in the first quarter, and 7.6 per cent in the second, according to the National Bureau of Statistics.
But September's monthly industrial production growth accelerated to 9.2 per cent year-on-year from the 38-month low of 8.9 per cent in August, indicating growing domestic demand.
Growth of retail sales of consumer goods swelled to a six-month high of 14.2 per cent, against 13.2 per cent in August. The run-up to National Day saw increased consumer demand.
The NBS also showed that growth in fixed-asset investments reached 20.5 per cent year-on-year in the first three quarters.
The data "can support our judgment that the economy may have bottomed out in the third quarter and is likely to see a moderate rebound in the last three months", said Sheng Laiyun, the NBS spokesman.
The data will probably make it unnecessary for the government to roll out additional aggressive stimulus measures, said Louis Kuijs, chief China economist at the Royal Bank of Scotland Group.
The existing measures are enough to support a moderate recovery, said Pan Jiancheng, deputy director-general of the China Economic Monitoring and Analysis Centre of the NBS.
The current momentum will "leave more space for restructuring the economy and changing its growth model", Pan said.
In the first three quarters, service industries contributed 43.8 per cent to GDP, against 42.6 per cent for the same period last year, the National Bureau of Statistics reported.
Meanwhile, industrial production in high-tech sectors grew 11.7 per cent from January to September, faster than traditional industries by 1.7 percentage points.
These were cited by Sheng as signs proving that a structural change is happening and industry upgrading is accelerating.
Wen also pledged to do more to boost growth, including improving credit and supporting products that enhance energy saving.
Measures to improving agriculture, food production and increase the supply of housing units will also be introduced.
"Going forward, domestic demand holds the key for China's growth recovery, while external challenges remain," said Qu Hongbin, the chief China economist with the HSBC Holdings.
"There is still a chance for a 25 basis points interest rate cut, but the central bank is more likely to rely on quantitative easing tools, such as liquidity injection through open market operation and reserve requirement ratio cuts," Qu said.
Commenting on the latest China data, Duncan Freeman, senior research fellow at the Brussels Institute of Contemporary China Studies, said there may be still difficulty ahead and "whether China can avoid a further slowdown will depend very much on the domestic response".