By Bloomberg News
Oct. 30 (Bloomberg) -- China will sustain its economic rebound this quarter and growth is likely to top the government’s 8 percent target for 2009, the central bank said.
Policy makers need to “manage inflation expectations,” curb excess capacity and encourage sustainable lending growth, the central bank said in a report on the third-quarter economy, posted on its Web site today.
China’s economic acceleration and faster-than-expected growth in the U.S. may help to extend this year’s global rally in stocks. Today’s comments contrast with the central bank’s July report, which described the world’s third-biggest economy as being in a “critical” phase and facing many uncertainties.
“The central bank is clearly more confident,” said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. “China’s economic growth will continue to rebound in the coming quarters.”
A $586 billion stimulus package and record growth in new loans have countered an 11-month slump in exports, helping China to bounce back from the worst global recession since the Great Depression. Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. reported yesterday gains in third-quarter profit as the economy gathered pace.
The central bank report adds to upbeat comments from officials. Vice Premier Li Keqiang said in Sydney today that the economy had gained momentum each quarter and reiterated that the country could meet its growth target.
Inflation Expectations
China’s consumer prices are expected to bottom and rebound at the end of this year, the central bank said. Households’ inflation expectations continue to strengthen, the central bank said, citing an index which has climbed for three quarters. Consumer prices rose 0.4 percent in September from August.
The report didn’t mention exchange-rate policy.
The Chinese economy expanded 8.9 percent in the third quarter from a year earlier, the fastest pace in a year. The U.S. economy returned to growth in the third quarter, expanding faster than economists forecast, after a yearlong contraction, figures from the Commerce Department showed yesterday.
In China, demand for credit will be sustained after an unprecedented $1.27 trillion of new loans in the first nine months of this year, the report said, adding that projects already started need “a large amount of loan support” and property investment is accelerating.
China’s economy expanded by 8.7 percent in the third quarter from the second quarter on an annualized, seasonally adjusted basis, the central bank said, citing its own calculation. That compared with a 14.9 percent gain in the second quarter, according to a previous central bank statement.
To contact the reporter on this story: Yanping Li in Beijing at yli16@bloomberg.net
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