BEIJING • China's economic growth looks set to accelerate for the first time in seven years this year, after hardly skipping a beat in the third quarter, but efforts to cut risks in property and debt are beginning to weigh on parts of the world's second-largest economy.
The economy grew 6.8 per cent in the third quarter from a year earlier, in line with analyst forecasts and down slightly from the 6.9 per cent in the second quarter, the National Bureau of Statistics said yesterday.
While the numbers met economists' expectations, they raise questions about the more optimistic forecast flagged by the country's central bank chief Zhou Xiaochuan, who on Sunday said gross domestic product could grow 7 per cent in the second half.
Analysts had pencilled in a gradual GDP slowdown due to an expected softening in property investment and construction as more cities try to cool surging housing prices, while a government campaign against riskier lending pushes up borrowing costs.
In all, the economy was solid and expected to comfortably beat the government's target of around 6.5 per cent for this year and last year's growth rate of 6.7 per cent, which was a 26-year low.
"The data shows that some deleveraging is continuing and government reforms are working, but growth is still being sup-ported at a reasonable rate," said Ms Kaori Yamato, senior economist at the Mizuho Research Institute in Tokyo.
China's economy has surprised global financial markets and investors with robust growth so far this year, driven by a renaissance in long-ailing "smokestack" in-dustries such as steel, and strong demand from Europe and the United States.
At the same time, there are concerns about the state's growing role in the economy: The acceleration in year-on-year state investment growth outstripped private investment growth last month.
Analysts and the International Monetary Fund warn that Beijing is still too reliant on debt-fuelled stimulus to meet fixed growth targets. Rating agencies estimate the overall debt burden at almost three times economic output.
On the sidelines of a key, twice-a-decade Chinese Communist Party congress yesterday, Mr Zhou said excessive optimism could lead to a "Minsky Moment". He was referring to a theory named after economist Hyman Minsky, in which debt or currency pressures trigger a collapse in asset prices after long periods of growth. His comments come on the 30th anniversary of the Black Monday Wall Street crash.
In the opening speech of the party congress, President Xi Jinping said China will deepen economic and financial reforms and further open its markets to foreign investors as it looks to move from high-speed to high-quality growth. But he also called for stronger, bigger state firms.
REUTERS
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