Q3 economic date expected to reflect increasingly solid recovery in Chinese economy

Thursday will be a big day for China watchers... GDP growth in the third quarter, along with other key indicators are due for release. But few are expecting a rude shock, with predictions pointing towards an increasingly solid rebound for the Chinese economy.

China's economy has maintained strong momentum for growth in the third quarter, after achieving a 7.1 percent figure for growth in the first half of this year, stoked by strong investment and robust consumption. Expectations are high for growth of around 9 percent in the third quarter. Boosted by the strong economic outlook, senior officials in the central government say China should have no difficulty reaching this year's target of 8 percent. The Chinese Academy of Social Sciences is forecasting annual GDP growth this year to reach 8.3 percent, while the Asian Development Bank has put its projection at 8.2 percent.

The 3rd quarter economic figure will also provide reference for further policy orientation. China has adopted a proactive fiscal policy, including a 4 trillion yuan spending plan spread over 3 years. However, in contrast to soaring government spending, private investment is lagging behind. Meanwhile, investment has been fueled by surging bank credit. New yuan loans in the first nine months hit 8 trillion yuan, far exceeding the target of 5 trillion yuan for the whole year. Quarter 3 economic data could provide clues as to whether China will be making any changes in fiscal and monetary policies.

Meanwhile, looking at other key figures, the Consumer and Producer Price Indices are likely to stay in negative territory, although the rate of decline is likely to narrow. And with economic recovery gaining strength, inflation expectations are high. The surge in international prices of oil, iron ore, non-ferrous metal and grain are all factors that could trigger inflation. Real estate prices have shot up over 20 percent this year, with investors snapping up properties to guard against possible inflation. However, many experts see no threat from inflation, as over-capacity in 19 out of 24 industries is likely to keep prices down in the immediate future.