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GDP growth hit 11.5% in 1st 9 months, NBS
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China's GDP was up 11.5 percent in the first nine months from the corresponding period last year, said the National Bureau of Statistics (NBS) on Thursday.


GDP rose by 11.5 percent in the third quarter, decreasing from 11.9 percent in the second quarter but higher than 11.1 percent in the first quarter.


The figure, far above the official growth target of eight percent for the whole year, indicates China is on track to post double-digit growth for the fifth year in a row in 2007.


Song Guoqing, a well-known economist with Peking University, said export reduction led to the GDP slow-down.


 Chinese government adjusted its export rebate policy from July, reducing or canceling the export rebates for products ranging from clothes to toys.


"In fact, traders exported their goods as many as possible before the rebate cut," Song said, "and that's why we see the GDP growing by 11.9 percent in the second quarter and 11.5 percent in the third quarter."


"Therefore, we still have to wait for the October statistics to see the impacts of the curbing measures," Song said.


According to the NBS, the country's foreign trade jumped by 23.5 percent to 1.57 billion dollars, down 0.8 percentage points from a year earlier.


Exports, the main driver of China's economy, grew by 27.1 percent to US$878.2 billion 0.6 percentage points higher, while trade surplus reached US$185.7 billion, up US$75.8 billion over the same period last year.


Although yuan is appreciating against the US dollar continuously and broke the 7.5 mark against one dollar Wednesday, exports keep rising as half of the good were exported by foreign-funded enterprises, who use dollars in transaction settlement, according to experts.


It leaves China few options but to curb investment, a major factor for the GDP growth only next to foreign trade, said Zhuang Jian, senior economist with Asian Development Bank Resident Mission.


The central bank may continue to raise interest rate or the deposit reserve ratio for commercial banks to increase investment cost, he said.


People's Bank of China announced to raise the reserve requirement ratio by half a percentage point to 13 percent for commercial banks from October 25.


This is the eighth such move this year and only one month after the seventh hike of half a percentage point on September 25.


Meanwhile, China may have one or two interest hikes by year end to curb investment, predicted Song.


China, the fifth time in a year, raised the one-year deposit and loan interest rates by 27 basis points to 3.87 percent and 7.29 percent respectively from September 15 in a bid to curb rising inflation and tighten control over excessive liquidity.


According to the NBS, China's GDP reached 16.6 trillion yuan in the first three quarters, with growth rate 0.7 percentage points higher than the same period of 2006.


The primary sector reported 1.82 trillion, the secondary sector 8.35 trillion and the tertiary sector 6.44 trillion yuan in added value in the first three quarters, with the secondary sector, including manufacturing, mining and construction, growing at 13.5 percent, 0.2 percentage points up from the same period of 2006.


The primary sector posted a growth rate of 4.3 percent and the tertiary sector, including transport, telecommunications, catering, tourism, banking and insurance, recorded an increase of 11 percent.


The NBS also announced on Tuesday that China's consumer price index, a key inflation indicator, rose by 4.1 percent in the first nine months over the same period last year


The CPI eased slightly to 6.2 percent in September after surging to an 11-year monthly high of 6.5 percent in August. Despite the slight drop in September, the CPI for the first nine months still climbed 0.2 percentage points from 3.9 percent for January to August.


The annual CPI rise could be 4.5 percent, said Yi Gang, assistant governor of the People's Bank of China, or the central bank, at a seminar in Hong Kong on Wednesday. The central bank would wait to see the CPI growth cool to match the deposit rate before considering further rate hikes.


China's key one-year deposit rate stands at 3.87 percent. Many people withdrew their bank deposits to speculate on stock markets where prices could soar by nearly 10 percent within a trading day.


Food prices jumped by 10.6 in the first nine months, said the NBS.


Grain prices were up by 6.3 percent, meat and poultry 29.1 percent, eggs 26.2 percent, aquatic products 4.6 percent, and fresh vegetables three percent, but fresh fruit prices were down 3.3 percent.


Retail prices of commodities rose by 3.2 percent in the first nine months, the producer prices for manufactured goods were up 2.7 percent, and the purchaser prices for raw materials, fuel and power rose 3.8 percent.


Zhu Zhixin, deputy director of the National Development and Reform Commission (NDRC), said about 86 percent of the rise, or 3.5 percentage points, was generated by food price hikes. He predicted the prices for farm produce, which triggered a drastic rise in the CPI and sparked inflation concerns, would continue to maintain a high level.


On the sidelines of the just concluded Communist Party of China congress, Zhou Xiaochuan, president of the People's Bank of China, put employment growth as a higher priority than inflation prevention in macro-economic controls and the recalibration of monetary policies.


He said the central bank would continue a prudent monetary policy to facilitate more coordinated economic development and support consumption expansion.


"The government may raise interest rates once or twice before the end of the year to curb inflation," said Song Guoqing, a researcher with Peking University.


Although the CPI slowed slightly in September, largely due to lower pork prices, it was still unstable and the downward trend could be temporary, he said.


(Xinhua News Agency October 25, 2007)

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