Chinese economy slows down as inflation quickens

Chinese economy slows down as inflation quickens

The Chinese economy posted a 9.6 percent expansion for the third quarter, its smallest increase in one year, while the inflation rate sped up last month to its quickest pace in almost two years, the country’s statistics bureau announced today.

Gross domestic product (GDP) beat analysts’ estimate of 9.5 percent and consumer prices matched expectations, rising 3.6 percent in September.

Manufacturing jumped 13.3 percent in September compared to one year ago, the statistics bureau reported.

A gain of 24.5 percent was recorded for urban fixed asset investments from January to September 2010 compared to the same period a year ago, almost matching the 24.6 percent estimate of analysts.

Financial regulators upped the interest rate for the first time in three years on Tuesday, underscoring China’s positive outlook for an economic recovery.

The status of the economy may dictate how much the government lets the yuan to appreciate amid pressure from overseas specifically the United States.

State intervention on the currency market would be the major topic during tomorrow’s G20 meeting in South Korea.

China has struggled this year to cope with spiking consumer prices and high gains on property prices following record lending and a $600 billion (4 trillion) economic stimulus program which drove much needed growth during the financial meltdown.

Foreign exchange reserves climbed to $2.65 trillion in the third quarter, showing the risk that extra cash in the system will drive the inflation rate upward.

Growth has slowed down from 11.9 percent during the first quarter as authorities stymied credit growth, housing sector speculation and tried to meet goals in energy efficiency and pollution.

Posted by James Fried on Thursday October 21 2010, 8:44 AM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0