China's economy weathering global slowdown, for now: Official

Tamora Vidaillet, Reuters, Beijing

China said on Tuesday its economy grew a rattling year-on-year 7.6 percent in the first nine months and is still likely to meet its seven percent 2001 growth target despite the toll inflicted by the global slowdown.

But it said the future was fraught with uncertainties over the economic impact of the U.S.-led war on terrorism and China, gradually opening its economy to the outside world, would not be immune to economic developments elsewhere.

"This year's target of seven percent is still obtainable because the growth for the first three quarters has paved the way for the whole year growth," senior official Li Xiaochao of the State Statistical Bureau told a news conference.

But he said the global economy was heavily reliant on the progress of U.S.-led air strikes against Afghanistan launched following the hijacked airliner assaults on New York and Washington on Sept. 11.

And China, where growth has been fueled largely by domestic consumption, is increasingly affected by global developments and will be more so when it joins the World Trade Organization, probably later this year, and lowers tariff barriers.

"It depends on how long this lasts and how it influences the U.S. economy and then China," Li said of future growth rates.

China's robust growth has contrasted strongly with the economic struggles of others, including the United States.

Nevertheless, Li said China had to do more to offset the impact of slowing export growth which dampened industrial production and spurred third quarter GDP growth of just seven percent, the lowest since the fourth quarter of 1999.

China's economy grew a robust 7.9 percent in the first half of this year and eight percent in 2000, powered by massive state spending and solid consumption.

The government's 2001 target of seven percent should be reached because of continued reliance on domestic demand as the main engine of growth and on heavy government spending on infrastructure, Li said.

The economic impact on China of the Sept. 11 attacks would be limited in the near term to the airline and insurance sectors, he said.

But Li acknowledged that the full impact of the U.S.-led response on the world economy was not yet known.

"The global economic performance is heavily reliant on progress on the U.S. attack on Afghanistan," he said.

"We should stay calm and try to offset the negative influence so as to reach relatively fast growth for the Chinese economy".