China's Q3 GDP growth fastest this year at 7.8%, but outlook murky

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After three decades of blistering expansion fuelled by exports and investment, Beijing is trying to shift the economic mix so that activity is geared much more to consumption. After three decades of blistering expansion fuelled by exports and investment, Beijing is trying to shift the economic mix so that activity is geared much more to consumption.
SummaryFirmer foreign and domestic demand lifted factory production and retail sales.

China's economy grew 7.8 per cent in the third quarter, its fastest pace this year and in line with expectations, as firmer foreign and domestic demand lifted factory production and retail sales.

Yet any optimism from the government figures released on Friday could fade quickly as global demand remains volatile, which was underlined by a surprise fall in exports in September. Efforts at home to engineer slower but more sustainable growth will also weigh on the economy in coming quarters, analysts say.

"The Q3 GDP figure is in line with market expectations but the uncertainty is whether the current recovery is sustainable," said Shen Jianguang, chief China economist with Mizuho Securities in Hong Kong.

"We think the recovery in the third quarter was mainly driven by the strong momentum of the property market."

After three decades of blistering expansion fuelled by exports and investment, Beijing is trying to shift the economic mix so that activity is geared much more to consumption. That means a slowdown from the double-digit growth of previous years.

Analysts polled by Reuters had expected the world's second-largest economy to grow 7.8 percent in the third quarter from a year earlier, picking up from 7.5 percent in the second quarter and compared with 7.7 percent in the first. The latest expansion was the strongest since 7.9 percent in the fourth quarter of 2012.

The data showed that the economy grew 2.2 percent on a seasonally adjusted basis from the previous quarter.

The GDP readings keep China on track to achieve the government's 2013 growth target of 7.5 percent, stronger than other major economies but still the worst performance for the country in 23 years. Growth in the first nine months of the year was 7.7 percent, the data from the National Bureau of Statistics showed.

"We have confidence in fulfilling the targets set out for economic and social development in 2013," Premier Li Keqiang said this month.

In other figures released on Friday, factory output in September rose 10.2 percent from a year earlier, slightly above expectations of 10.1 percent and slowing down from August's annual pace of 10.4 percent.

Retail sales rose 13.3 percent from a

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