10/21/2010, 00.00
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Chinese growth slows down, inflation accelerates

Third quarter growth slows to 9.6 per cent against 11.9 in first quarter. Inflation hits 3.6 in September, record high in two years, dragged by food prices, which soar 8 per cent. Tomorrow, G-20 meets to discuss currency policies. China reiterates its opposition to stronger yuan.

Beijing (AsiaNews/Agencies) – China's growth slowed in the third quarter (+9.6 per cent) as inflation edged higher. Experts note that its economy is still growing but speculation remains a distinct possibility. Should it get out of hand, the latter would negatively affect the domestic market whose expansion is necessary for continued growth.

With economic growth down from 10.3 per cent in the second quarter, and 11.9 per cent in the first, China must continue to reassess its export-oriented model of development, and pay closer attention to its big domestic market.

Inflation rose 3.6 per cent in September, a high never seen since October 2008. The price of food, which represents the largest chunk of expenditures for poor families, rose by an annual rate of 8.0 per cent. In August, prices had also increased by 3.5 per cent, higher than the 3 per cent forecast by the government.

In order to rein in inflation, the central bank on Tuesday announced an interest rate rise of 0.25 percentage points, the first since 2007, to contain borrowing and excess liquidity.

Still, China’s economy is still going strong. Urban fixed-asset investment gained 24.5 per cent in the first nine months of the year.

The government also plans additional public works, infrastructural development and clean energy generating plants.

Tomorrow, a meeting of G20 finance ministers will be held in South Korea, to discuss currency policies with the United States and Japan expected to push for a stronger yuan, and China holding steadfast against it.

With today’s figures, Beijing can argue that high inflation and unemployment will prevent any revaluation of its currency; despite the fact that experts note that China’s economic growth is three times that of the United States.

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