Investment in fixed assets slows but curbs must stay in place, says government statistics official The pace of the country's rapid economic growth eased slightly in the third quarter on the back of a slowdown in fixed-asset investment as macro measures began to take effect, the government said. Gross domestic product rose 10.4 per cent year on year in the July-September period, compared with 11.3 per cent in the previous quarter, Li Xiaochao, spokesman for the National Bureau of Statistics, said yesterday. Mr Li said while the government's macro measures - imposed to curb investment and avert overheating - took effect, controls must stay in place. In the first nine months, the economy expanded by 10.7 per cent, slightly slower than the 10.9 per cent registered in the first half. With the pace of economic growth easing, however, the government is unlikely to introduce any further tightening measures in the remaining three months. 'Excessive economic growth has been basically brought under control. This data shows that the tightening policies adopted by the central government have been timely and effective,' Mr Li said. Investment in property and other fixed assets grew by 27.3 per cent in the first three quarters, compared with 29.8 per cent in the first half. Mr Li said the number of new projects was down from the previous quarter. 'This is good news,' he said. Economists said the data appeared to ease pressure on the central bank to raise interest rates for a third time this year or the government to impose new measures. Hong Liang, chief China economist with Goldman Sachs, said the moderation in investment growth was the reason behind the slower economic growth. 'Specifically, investment growth softened on the back of the administrative tightening measures implemented since late in the second quarter.' Ms Liang said she expected the intensity of controls over investment demand would gradually ease, as the latest data would allow policymakers to observe the economy for a few more months. 'The authorities will likely put more emphasis on policy implementation and prevention of policy slippage, rather than undertaking additional new tightening, except in the currency area,' she said. Mr Li said the government needed more time to watch developments before deciding whether or not to raise interest rates again. But he expected the economy to maintain its current growth rate in the final quarter. If so, full-year GDP growth should exceed the 10.2 per cent seen last year. The economy grew 10.1 per cent in 2004 and 10.0 per cent in 2003. A target of 8 per cent year-on-year growth was set for this year. Ha Jiming, chief economist of China International Capital Corp, said this year's growth would be around 10.5 per cent, which would be the highest in three years. Mr Li, however, warned the achievements brought by macro-regulatory control should be further enhanced as structural contradictions still exist. The government was concerned robust investment-driven growth could lead to bad debt in state banks and create a further bottleneck for the economy. Premier Wen Jiabao said on Wednesday it was too soon to relax controls. Investment in urban property rose 24.3 per cent to nearly 1.3 trillion yuan in the third quarter. Inflationary pressure was mild, with the consumer price index rising just 1.3 per cent in the first nine months. Growth of industrial output also slowed to 16.2 per cent in the third quarter, down 1.9 percentage points from the previous quarter, according to Mr Li. Total trade in the January-September period was up 24.3 per cent, with exports rising 26.5 per cent, while imports were up 21.7 per cent. Mr Li defended China's data saying the statistics reflected the momentum of growth.