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China's Growth Rate Slows to 10.4% in Quarter

October 20, 2006|From Reuters

BEIJING — China's annual growth rate slowed a little in the third quarter to 10.4%, but the world's fourth-largest economy is still firmly on course to log a fourth consecutive year of double-digit expansion.

The slowdown, from 11.3% in the second quarter, followed a concerted campaign by Beijing to prevent a credit-fueled investment boom from turning into a bust that could saddle the nation's banks with fresh bad loans.

"Excessive economic growth has been basically brought under control. This data shows that the tightening policies adopted by the central government have been timely and effective," Li Xiaochao of the National Bureau of Statistics said Thursday.

But the third quarter's annual growth rate was still the second strongest since the fourth quarter of 2003, and Li said the economy would probably keep up the momentum in the fourth quarter.

Gross domestic product in the first nine months grew 10.7% from a year earlier, faster than any other major economy.

JPMorgan responded by raising its forecast for 2006 GDP growth to 10.6% from 10% and for 2007 to 9.5% from 9%.

With record trade surpluses creating political and monetary headaches, Beijing wants to rebalance growth away from exports. And with environmental problems rising, China is waging war on wasteful investment.

But with national income still only about $1,700 per capita, the country has no desire to slam the brakes on an economy that grew 10.2% in 2005, 10.1% in 2004 and 10% in 2003.

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