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China blames global woes as economy eases

Retail sales, a main indicator of consumer spending, increased 22.0 percent in the first three quarters of 2008 compared with a year earlier, while rising by 23.2 percent in the month of September, he said.
by Staff Writers
Beijing (AFP) Oct 20, 2008
China's economic growth slowed to 9.0 percent in the third quarter as global financial woes started taking a toll, the government said Monday, signalling it would respond with new stimulus measures.

It was the first time since late 2005 that quarterly growth slipped into single digits and the lowest growth figure since the second quarter of 2003, providing the most powerful indication yet that China was not insulated from the global economic downturn.

"The growth rate of the world economy has slowed down noticeably. There are more uncertain and volatile factors in the international economic climate," said Li Xiaochao, spokesman of the National Bureau of Statistics.

"All these factors have started to release their negative impact on China's economy," Li told reporters in announcing the data.

As a result of the slowdown in the period from July to September, growth in the world's fourth-largest economy weakened to 9.9 percent over the first three quarters of the year.

This was down from 10.4 percent in the first half of 2008 and 12.2 percent in the first three quarters of 2007.

Shanghai's stock market initially fell on the quarterly figures before rallying late in the day for a 2.25 percent gain with traders buoyed by the prospect of a government stimulus package.

The government signalled ahead of the release of the data that the need for new measures to boost growth had moved to the top of the policy-making agenda.

"There is the slowing trend in economic growth, the pace in the rise of corporate profits and fiscal revenue are falling, and the capital markets continue to swing and be sluggish," it said Sunday in a summary of a cabinet meeting chaired by Premier Wen Jiabao.

The meeting, held Friday, agreed on pro-growth measures such as support of home-buying and a cut in the tax on residential housing transactions, the statement said.

They also agreed on raising export tax rebates to ensure stable export growth, it said.

China's trade surplus for the first nine months of the year reached 180.9 billion dollars, down 2.6 percent year-on-year, the customs administration said earlier.

Confirming the trend for a slowdown in the heavily export-dependent economy, industrial output growth was 15.2 percent in the first three quarters of 2008, down from 16.3 percent in the first half, according to the statistics bureau.

For the month of September alone, industrial output growth was 11.4 percent, it said.

As exports are slowing, China has looked to other sources of growth, particularly domestic investment and consumption.

Fixed-asset investments, a key gauge of government spending on infrastructure and factories, rose 27.0 percent in the first three quarters of 2008, compared with 26.3 percent in the first half, the bureau said.

Li said that although the global economic turndown had impacted China's economic growth, the nation's accumulated wealth, high savings and untapped consumer spending left room for optimism.

"China is still capable of warding off the potential negative impact of the global economic turndown," Li said.

"Although we must be mindful of the difficulties and challenges we are facing and must be on alert, at the same time we can also see our advantages and be confident that we can overcome these difficulties."

Retail sales, a main indicator of consumer spending, increased 22.0 percent in the first three quarters of 2008 compared with a year earlier, while rising by 23.2 percent in the month of September, he said.

China's policy makers started out the year focusing heavily on taming inflation after food prices rose rapidly, but this has gradually become less of a concern.

The figures released Monday showed that inflation continued to slow, standing at 7.0 percent in the first three quarters of 2008, and 4.6 percent for September alone.

The figures compared with 7.9 percent inflation in the first half of 2008, and a near 12-year high of 8.7 percent recorded for the month of February.

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