Confirmation that China is well on the road to economic recovery was given today when Beijing reported that economic growth had accelerated to 8.9 per cent in the third quarter.

The figures showed that gross domestic product for the first nine months of the year expanded by 7.7 per cent, putting the target of 8 per cent for the full year easily within reach.

Industrial production growth quickened to 13.9 per cent in the 12 months to September from 12.3 per cent in August, while daily steel output in September matched August's record and iron ore production scaled a new high.

Many analysts believe, however, that the figures underplay China's economic growth, and that officials have been smoothing the numbers.

Glenn Maguire, chief Asian economist with Société Générale, said: "It is not in China’s interest to be boastful of its strong growth at the time being."

Beijing is eager to avoid pressure to restart appreciation of the yuan, which has barely moved against the dollar for two years. Nor is the Government in any rush to ease policy amid concerns that private sector growth is lagging the state sector. A lower third-quarter figure will also help to ensure that China can close the year with an even stronger number for growth and further delay tightening.

Fuelling the economy has been Beijing’s 4,000 billion yuan (£350 billion) pump-priming package that has galvanised investment and placed the once-fanciful 8 per cent growth goal target within in reach. Capital spending contributed 7.3 percentage points to headline growth of 7.7 per cent in the first three quarters.

Andy Rothman, a macro strategist for brokerage CLSA, said: “China has begun, however, to implement its exit strategy, which is a gradual reduction in the level of stimulus in response to rising private investment and consumption."

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