China says growth better balanced across regions

China's annual gross domestic product growth slowed in the third quarter to 11.5 per cent from 11.9 per cent in the second quarter, the National Bureau of Statistics said.

Spokesman of the National Bureau of Statistics, Li Xiaochao said investment and production in central and western China were rising rapidly, meaning that imbalances among regions were easing.

"Investment is an important indcator for how the next round of economic growth will play out."

Investment in central China was up 36.2 per cent in the first nine months from a year earlier, compared with 29.6 per cent in the west and 21.4 per cent in the east, he said.

He said property prices in 70 major cities rose 8.2 per cent in the third quarter from a year earlier. Newly built homes climbed 9.0 per cent in the quarter, while existing homes were up 7.6 per cent.

He said property price acceleration was especially evident in some larger cities. For the first nine months, annual growth in Shenzhen was 15.7 per cent, Beihai recorded 12.1 per cent, while in Beijing it was 10.1 per cent.

"The supply of housing is very tight and has an irrational structure. For example, the supply of small and medium-sized homes at a relatively low price is too small. He also attributed house price gains in part to growing demand on the back of rising incomes and the pace of urbanisation.

He said another factor was rapidly rising land prices, noting that land prices in 70 major cities had grown at an annual rate of 15 per cent in Q3, compared with 13.5 per cent in Q2 and 9.8 per cent in Q1.

"Another reason is expectations in the market about rising prices for property. There are also some people buying homes for investment purposes."

He noted that rent prices were up 4.1 per cent in the first three quarters. He defended the fact that they do not use the sales prices of homes in the CPI, saying this was in line with international practice.

"There are certain things that residents spend money on but that doesn't count as consumption, so we can't include them in the consumer price index - these include transfer payments, donations, and investment in securities and property."

"The US real estate sector and the sub-prime loan issue will have an impact on global economic performance in the coming term. As to the growth in the EU and Japan, we still need time to look at it.

"Also, with prices for oil and primary products still going up, this adds to uncertainty about global growth.

He said that because of the uncertainties about the global economy, its influence on China's economy was also uncertain, so they will keep a close eye on it."

"In recent years we've adopted macro-control policies which have paved the way for the solid, good development of the economy."

"Because of these macro-control policies, we have already prevented growth from going from fast to overheated."

"We've improved infrastructure, the supply of energy, the transportation system; and the problems of bottlenecks are no longer there, laying a solid foundation for growth."

"Through these measures, we've done well to take advantage of the positive international economic environment, so the Chinese economy has maintained stable, rapid growth."

"The three major drivers are moving in the desired direction."

He gave the following breakdown for contribution to growth:

Domestic consumption: 37 per cent, investment 41.6 per cent, external demand 21.4 per cent.

"Residents' consumption will continue to grow relatively quickly in the future and become an important driving factor for the economy."

He also pointed to signs of changing consumption patterns. In the first nine months, he said car sales were up 38.1 per cent over the year-ago period, while furniture was up 38.7 per cent, and construction materials and home decorations were up 43.3 per cent.

"In recent years, adjusting the relationship between investment and consumption has been one of the key issues for our macro controls. The goal is to increase the role of consumption in driving growth.

"This year, consumption has grown fairly quickly. The reason for this is peoples' incomes are growing quickly. As incomes grow, consumption will naturally pick up."

"The impact of improving social welfare is also having good effects."

He said that fiscal spending on job creation and welfare had reached 308.9 billion yuan in the first nine months, up 29.5 per cent on an annual basis.

Reuters