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China's exports, output leap
BEIJING, China (Reuters) -- China said on Tuesday exports and factory output grew strongly in September, but officials and analysts question whether the economy can flower if the global economy sours. "China's economy has so far performed better than people had expected. Export growth is also stronger than expected," said Qu Hongbin, senior economist at HSBC in Hong Kong. In the first nine months of this year, China's exports rose 19.4 percent to $232.56 billion while imports climbed 17.2 percent to $212.57 billion, according to Foreign Trade Ministry data published in state media. China's exports have shot ahead this year after a relatively sluggish start, rising 33.1 percent in September alone after a 25 percent rise in August. Hidden uncertainties aheadBut many analysts say the precarious state of the U.S. economy - the biggest market for Chinese-made goods - means it is only a matter of time until that growth tapers off. "There are various hidden uncertainties if we look at the main growth engines," Qu said. "Exports depend on external factors and it will be a big question as to whether China's exports can be a single flower blossoming if the world economy slows next year." China is due to release third quarter economic data on Wednesday. The economy grew by 7.8 percent in the first half and a recent poll of analysts showed they expect full-year growth of 7.7 percent. Foreign Trade Minister Shi Guangsheng also sounded a note of caution about next year, the International Business Daily said. He said several negative factors loomed over next year, including a turbulent geopolitical picture, whether the U.S. economy could stage a recovery and the increased use of trade barriers by other nations. "Although the current situation makes for good forecasts, the situation next year is quite complex and preparations need to be made to deal with difficulties and to maintain development," Shi was quoted as saying. Looking for new marketsA 10-day port shutdown on the U.S. West Coast this month was likely to affect October exports, but export growth for the full year was still seen between 16 and 17 percent, said economist Wang Jian of the State Development and Planning Commission. "The U.S. consumer confidence index has fallen for several months in a row and consumption prospects in the American market are gloomy, posing a relatively large threat to China's exports," Wang said. Trade Minister Shi urged Chinese firms to hone their competitiveness, search out new markets and make better use of the foreign capital which has flooded in as overseas companies try to tap China's deep pool of cheap labor. Foreign direct investment in China hit nearly $39.6 billion in the first nine months, up 22.6 percent from a year earlier. Contracted foreign investment, an indicator of future trends, soared 38.4 percent in the period to almost $68.4 billion. Above government targetsThe rise in foreign investment is also linked to China's strong exports as companies set up manufacturing or assembly operations. Imports are also boosted as those businesses buy machinery or components from abroad, analysts say. Moreover, the big factory build-up drives industrial output, which China said on Tuesday rose 13.8 percent in September thanks to output of cars and telecommunications products. That was higher than the 12.7 percent pace in August and well above the government target of nine percent seen needed to keep the economy expanding by at least seven percent this year. However, factory output has also been propped up somewhat by state spending programs aimed at stimulating demand and checking nagging deflation.
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