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. Last Updated: 07/27/2016

China's Economy Up 7.4%, Deflation Persists




BEIJING -- China's economy grew at a respectable 7.4 percent annual rate in the first nine months of the year, but was unable to shake off nagging deflation despite government stimulative measures, official data showed Tuesday.


China's gross domestic product growth for the January-September period was just below market expectations after a year-on-year 7 percent rise in the third quarter.


That meant it was still on track to meet its modest target of 7 percent growth for the full year, analysts said.


But China still showed a substantial 3 percent drop in retail price inflation for the January-September period, signaling no end in sight to two years of negative inflation.


"The inflation numbers are a bit worse than we expected," said Yu Dazhang, an economist at Unirule Institute of Economics in Beijing. "We still see problems with domestic consumption."


The September retail price index was down 2.8 percent - better than the April and May falls of 3.5 percent. But the September fall was steeper than the 2.6 percent decline recorded in August, according to the State Statistical Bureau.


The broad consumer price index, which includes rents and services, was down 1.6 percent year-on-year for the January-September period.


China has used a variety of measures to convince consumers to take money out of the bank and start spending in a bid to boost growth.


It has cut interest rates seven times since May 1996, and more recently, it has announced it would start taxing interest on bank deposits.


It launched a huge public works program over a year ago, though its spending has slowed this year.


Foreign direct investment in January-September was down 6.8 percent from the same period last year at $29.2 billion. FDI for September alone was up about 5 percent, however.