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China's Growth Slows To 10.3%

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World's third-largest economy slows from 11.9% as impact of stimulus eases and Beijing curbs credit boom

China's rapid growth is slowing as the impact of its massive stimulus eases and Beijing clamps down on a credit boom.

The world's third-largest economy expanded by 10.3% in the second quarter over a year earlier, down from the first quarter's explosive 11.9% growth, the National Bureau of Statistics said today.

A Chinese slowdown could have global implications if it cuts demand for imported iron ore, industrial components and other foreign goods. Global companies are looking to China to drive demand amid weak sales elsewhere.

China rebounded quickly from the global downturn, powered by $586bn (£385bn) of stimulus spending and a flood of bank lending. But communist leaders worry about surging housing prices and a possible spike in bad loans at state-owned banks. They have imposed curbs on lending and investment, key drivers of growth and demand for imported iron ore and other foreign goods.

"A slowdown in the growth rate will benefit the economy because it will prevent it from growing too fast and being overheated," said a statistics bureau spokesman, Sheng Laiyun, at a news conference. He said that despite the decline, the latest growth is "very high" and within the government's target range. Beijing's official growth target for the year is 8%, which analysts say it easily should achieve.

Sheng said lower growth also would work in favour of Beijing's effort to boost domestic consumption and reduce heavy reliance on resource-intensive investment and exports to drive Chinese growth.

Other indicators show manufacturing activity, bank lending, auto sales and other areas all moderating from 2009's heady growth rates. June exports rose 35% over a year earlier but analysts expect Europe's debt crisis to cool global demand.

I wonder what level of growth is needed to keep credit expansion serviceable?

So govt stimulus gets withdrawn and growth slows, wow this is unexpected.

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