Q3 economic date shows solid recovery, no sign of high inflation

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China's economy is rebounding strongly. Latest figures released by the Chinese government this morning, October 22, 2009, show the country's GDP has grown almost nine percent year on year in the third quarter. Officials say China will now achieve its 8 per cent growth target without doubt. Meanwhile, there is little threat of high inflation.

From increased sales for shoemakers and automakers to a reawakening real estate market and job market, China's stimulus package launched late last year has proved to be one that works.

And the surge isn't just about the real economy.

Press Conference:

China's 3rd quarter economic performance (I)>>

China's 3rd quarter economic performance (II)>>

The Shanghai stock market is up nearly 70 percent so far this year, one of the fastest growing markets in the world.

All these signs of a solid recovery are further substantiated by the third quarter's economic data.

Li Xiaochao, spokesman of National Bureau of Statistics, said, "The economy is stabilizing and gaining momentum for steady growth. The overall situation is positive. Preliminary estimates show that the total GDP in the first 3 quarters has exceeded 21.7 trillion yuan, an increase of 7.7 percent year on year. The GDP growth rate for the first quarter is 6.1%. The figure for the second quarter is 7.9% and the third quarter it's 8.9%."

Another key figure is the consumer price index. That remained in the negative territory in the past three months, but the speed of its decline has narrowed. And the producer Price index is in a similar situation.

Li Xiaochao also said, "The CPI fell by 1.1% in the first 3 quarters year on year. The figure is 1.3% in urban areas and 0.7% in rural areas. The PPI dropped by 6.5% in the first 3 quarters year on year."

But the rosy figures don't mean the Chinese economy has solved all its problems.

The State Council admits the current stimulus plan focuses, in a large part, on fixed-asset investment. And many other issues have not been adequately addressed, such as further boosting domestic demand and private investment, and propping up a still weak service industry.

An over-dependence on government spending has a track record of leading to overcapacity and wasteful investment.

China's growth figures might be the envy of the recession-weary world. But to make the recovery sustainable and to really turn the crisis into an opportunity, China needs to strengthen the upgrading and restructuring of industry to help domestic enterprises move up the value chain, and address the imbalance of an export-dependent economy.