BEIJING: China's economy grew 9.1% in the third quarter from a year earlier, the slowest pace since 2009, driving stocks lower on concern that Europe's debt crisis is dragging on the global recovery.
The gain was less than the median estimate of 9.3% in a Bloomberg News survey of 22 economists and followed a 9.5% increase in the previous three months. The statistics bureau released the data in Beijing on Tuesday.
Asia's benchmark stock index sank after China's growth was limited by tighter credit and weaker demand from Europe, where Germany on Monday rejected speculation that any immediate resolution of the region's crisis is possible. A slowdown in the pace of China's expansion, which remains five times that of the US, may help Premier Wen Jiabao tame inflation that is above the government's target. "The latest developments in the euro zone have unnerved investors and many are fearful we're going to see a repeat of the slump we saw at the end of 2008," said Tim Condon, Singapore-based head of Asian research at ING Groep NV and a former World Bank economist. A "hard landing" for China would require a bigger "shock" to growth than is likely, he said. The Shanghai Composite Index closed 2.3% lower. The MSCI Asia Pacific Index fell as much as 2.7%. The yuan weakened 0.2% to 6.3813 per dollar.
Faster Output Growth
Industrial production increased 13.8% in September from a year earlier, the statistics bureau said. That compared with the 13.4% median estimate in a Bloomberg survey and a gain of 13.5% the previous month.
Concerns about China's economy are focused on bad-debt risks for banks, funding for small businesses, and the ability of local governments to repay money borrowed for infrastructure projects. China Business News reported that rail projects have been halted due to cash shortages and the People's Daily reported that some road building stalled for the same reason. "The risk of a hard landing is a distant scenario," said Liu Li-Gang, an economist at Australia & New Zealand Banking Group in Hong Kong. HSBC Holdings and Bank of America Merrill Lynch echoed that view. Barclays Capital said the nation's full-year expansion should be about 9%, with growth to slow to below 8.5% this quarter.
Monetary Policy
Any "outright easing of monetary policy will have to wait until inflation expectations stabilise and external demand falls sharply," said Liu, adding that "partial easing" could include reducing reserve requirements for small and medium-sized banks.
Fixed-asset investment excluding rural households climbed 24.9% in the first nine months, compared with the 24.8% estimated by economists and a 25% gain through August. Property investment for January-to-September rose 32%, from 33.2% through August. Retail sales expanded 17.7% after a 17% increase in August.
Companies including BASF SE, the world's largest chemicals company, are expanding in China as higher wages and consumption boost demand. The German company and China Petroleum & Chemical Corp this month completed an expansion of an ethylene plant in the eastern city of Nanjing.
China's economy grew 2.3% in the third quarter from the previous three months, seasonally adjusted, the statistics bureau said on Tuesday. That compared with a revised 2.4% gain for the second quarter.
