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Overheating a Fear as Economy Races Ahead

China's economy rose 11.5 percent in the third quarter from a year earlier, slowing from a 12-year high of 11.9 percent in the second quarter, the National Bureau of Statistics reported yesterday.

Despite the slow-down indication, the economy remains in the fast track and requires strengthened macro economic controls to prevent it from the rapid growth that leads to overheating, said Li Xiaochao, the bureau's spokesman.

Combined gross domestic product through September increased 11.5 percent year on year to 16.6 trillion yuan (US$2.21 trillion), boosted by a faster pace for consumer spending and industry production.

In the first nine months, public retail expenditure jumped 15.9 percent to 6.38 trillion yuan from a year earlier, with a 17-percent surge in September alone.

The industry output reported an 18.5-percent gallop through the third quarter, 1.3 percentage points higher from the same period last year.

Growth of spending on fixed assets cooled a slight 1.6 percentage points from a year earlier, with an increase of 25.7 percent to 9.15 trillion yuan.

"The increase of consumer spending is the outcome of rising incomes, an improved social security system and the improvement of industries such as vehicle and furniture manufacture," said Li. "Consumption will contribute more and become an important driver to China's economic development."

Disposable income for city dwellers climbed 13.2 percent to 10,346 yuan through September from a year earlier and earnings for rural households accelerate 14.8 percent to 3,321 yuan.

China's Consumer Price Index, the main gauge of inflation, increased 4.1 percent through the third quarter.

The CPI eased slightly to 6.2 percent in September after surging to an 11-year monthly high of 6.5 percent in August.

The annual CPI rise could be 4.5 percent, said Yi Gang, assistant governor of the People's Bank of China, or the central bank, at a seminar in Hong Kong on Wednesday.

China has reduced taxes, raised minimum wages and improved education, welfare and health services in a bid to boost consumer spending and relieve the reliance of economy on investment and exports.

To curb overseas sales of energy-consuming and highly polluting products, from July the Ministry of Finance cut the tax rebates on 2,831 products, including steel, non-ferrous metal and other raw materials, helping to reduce dependence on exports.

But the trade surplus still swelled through the third quarter to US$185.7 billion, US$75.8 billion more compared with a year earlier.

Exports soared 27.1 percent to US$878.2 billion in the first nine months while imports jumped 19.1 percent to US$692.6 billion.

(Shanghai Daily October 26, 2007)

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