China's economy roaring again...may trigger tightening

China’s economy expanded at the fastest pace in a year in the third quarter on the back of the government's massive stimulus spending and record bank lending. Gross domestic product (GDP) grew by 8.9% in the third quarter compared to the same period a year ago, according to data released by the National Bureau of Statistics. For the first nine months of 2009, GDP gained 7.7 percent from a year before. The increase was greater than the 7.9% expansion in the second quarter, and was broadly in line with estimates. A string of other economic data released this week added to growing speculation that Beijing could begin to unwind its unprecedented expansionary policies next year. But they will have to ensure that the withdrawal of record fiscal and monetary stimulus doesn't lead to a slowdown in the world’s third-biggest economy.

Urban fixed-asset investment rose 33.3% in the first three quarters, edging up from 33.0% growth in the first eight months of the year, the Statistics Bureau said. Industrial production in September rose 13.9% year on year, higher than expectations of a 13.3% rise and above August's 12.3% gain. For the first nine month of the year industrial production is up 8.7%. Data also showed that the consumer price index (CPI) fell for an eighth successive month in September from a year-earlier, by 0.8%, but this marked a slowing of deflation after August's 1.2% contraction. The producer price index (PPI) dropped 7.0% for the month, easing from a 7.9% fall in August.