CHINA’s economy defied expectations by barely slowing at all in the third quarter, continuing to forge ahead at a 9.4 per cent annual rate.

The strong performance, down just a fraction from the 9.5 per cent pace in the previous three months, was boosted by strong industrial output and investment. The rise confounded a drive by the communist leadership to slow down China’s runaway expansion.

The gross domestic product (GDP) figure, which almost certainly underestimated the rate of growth, showed the resilience of China’s economy in the face of soaring oil prices and a government campaign to rein in investment. The world’s seventh-biggest economy showed annual growth of 9 per cent or more for a ninth successive quarter.

The Government wants to maintain strong growth to ensure jobs for hundreds of millions of farmers, migrant labourers and employees of struggling state enterprises. It also wants to create prosperity for a rapidly expanding middle-class. At the same time, Beijing is trying to rebalance a dependence on investment, particularly on exports, to silence American criticism of its trade surplus.

Takamoto Suzuki, an economist at Mizuho Research Institute in Tokyo, said: “The figures show that growth has not lost any momentum. There is little sign that policies to restrain investment are having an effect on growth.”

Several international banks revised their forecasts to predict more rapid growth next year, expecting a pick-up in domestic demand amid government policy changes aimed at nurturing consumption.

Those stronger forecasts will probably be welcome in the markets, since China’s economy has become an important motor for the world economy. Demand from China is cited as a factor fuelling oil and commodity prices.

However, the growth rate highlights imbalances in an economy still in transition from a centrally planned system to one motivated by market forces. China faces the danger that too many goods are being produced as a result of an emphasis on market share rather than on profit.

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