Lavish government spending and bank lending helped China's growth rate accelerate to an 8.9 percent pace in the third quarter, far outstripping expansions elsewhere around the globe and raising questions about whether the rapid rebound can be sustained. China also announced Thursday that industrial production and investment spending are growing at a faster pace. That seemingly good news unsettled local stock investors, however, on fears Beijing may need to rein in its stimulus policies to avoid asset bubbles and inflation. Companies, central bankers and political leaders around the world are increasingly counting on growing demand from Chinese producers and consumers to offset sluggish home markets. Corporations from Coke to Caterpillar are seeing their strongest sales in Asia, particularly China. So far, the growth is coming mostly from government-backed spending on construction and other projects, but demand from China's traditionally frugal, still relatively poor consumers is also rising. The world's third-largest economy began to falter in late 2008 as exports plunged and thousands of factories shut down, throwing millions out of jobs. China fought back with a 4 trillion yuan ($586 billion) stimulus plan involving massive spending and bank lending for construction of infrastructure such as railways and roads to pump up the domestic economy. Growth fell to a low of 6.1 percent in the first quarter, but rebounded to 7.9 percent in the second quarter, hitting 8.9 percent in the third quarter compared with a year earlier. That puts the economy on track to at least meet the official target of an 8 percent expansion for 2009. With China in the forefront, “Asia appears to be leading the global recovery,” Federal Reserve chairman Ben Bernanke said earlier this week. “Recent data from the region suggest that a strong rebound is, in fact, under way.” Yet sustaining the upswing beyond a few quarters hinges on stronger demand for exports from important markets such as the US, Europe and Japan which are emerging only slowly from the worst global recession since World War II. Signaling another set of concerns, China's top leaders said Wednesday that policies will increasingly focus on countering inflation - a problem that had seemed below the horizon with consumer prices down 1.1 percent so far this year. They also resolved to clamp down on waste, industrial overcapacity and other imbalances brought on by the rapid resurgence in growth. Still, the announcement that growth continued to accelerate in the third quarter contained a hint of jubilation over Beijing's progress in mending damage from the global economic crisis. “We can say we have made obvious and remarkable achievements in our economic growth,” National Statistics Bureau spokesman Li Xiaochao told reporters in Beijing. “We have quickly reversed the economic slowdown. The momentum of the recovery is solid and overall, our economic performance is showing signs of improvement,” Li said. Industrial output rose 8.7 percent in the first three quarters of the year, and 12.4 percent in July-September - signaling accelerating demand for steel and other industrial goods. While China's imports still fall far short of its exports, its recovery is playing a stabilizing role for other, harder-hit economies, said David Cohen, director of Asian economic forecasting for the consultancy Action Economics in Singapore.
