China reports rebound in economic growth but analysts say outlook dim

Government spending boosted the economy 7.8 percent in the third quarter but that 'could be as good as it gets'

Customers browse clothing inside a store in Wuhan, China, on Thursday, Oct. 17, 2013.
Tomohiro Ohsumi/Bloomberg/Getty Images

China's economic growth rate has rebounded to 7.8 percent in the latest quarter after a boost in government spending to reverse a sharp downturn, although signs are already emerging that the pickup in activity may lose some vigor.

Growth of the world's second-largest economy accelerated from the previous quarter's two-decade low of 7.5 percent, according to the National Bureau of Statistics.

"This growth has been stimulated by government investment into the economy, and there is concern among some over the sustainability of this growth," Al Jazeera's Marga Ortigas, reporting from Guangzhou, said on Friday.

Communist leaders want to steer China's economy to a slower, more sustainable level based on domestic consumption instead of exports and investment.

The data, however, shows China is a long way from having domestic consumption as the main driver of its economic growth. Consumption accounted for 46 percent of growth in the first nine months, compared with 56 percent taken up by investment.

Analysts have warned the rebound might not last because Chinese consumer spending is growing more slowly than Beijing wants and global demand is weak.

The unexpectedly abrupt decline in global demand for Chinese goods prompted Beijing to reverse course temporarily and take targeted steps to prop up growth and avoid job losses.

Weak global demand

Communist leaders are due to meet in November to craft an economic development blueprint that reform advocates hope will include market-opening and more financial support to private entrepreneurs.

The country's top economic official, Premier Li Keqiang, said earlier Beijing would try to keep growth from falling below 7.5 percent.

That is far above levels forecast for the US, Europe and Japan but barely half of 2009's 14.2 percent growth.

Friday's data highlighted the economy's heavy reliance on government-led investment and the weakness of trade.

Trade was so weak that its contribution to overall growth was negative, according to Sheng, and detracted 0.1 percentage point from the quarter's growth rate.

September exports suffered a rare and unexpectedly sharp decline of 0.3 percent, falling short of forecasts.

The International Monetary Fund is predicting Chinese growth this year of 7.6 percent, which would be the weakest performance since the early 1990s, and some private sector analysts have cut their growth forecasts for next year to below 7 percent.

The 7.8 percent growth "could be as good as it gets," said Mark Williams from Capital Economics in London. "We continue to expect gross domestic product growth to slow next year to around 7 percent."

Al Jazeera and agencies

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