Economic growth in China hit a six-year low in the third quarter but there were enough positive signs to suggest that stimulus measures may be working.
The economy expanded at just 6.9 per cent in the three months to Sept 30, the poorest performance since the first quarter of 2009 but slightly ahead of the 6.8 per cent market estimate.
While some analysts doubt the reliability of the official data released yesterday, most saw the numbers as a sign of cyclical recovery in some sectors, suggesting that the government's stimulus is keeping the economy churning.
Manufacturing remained weak with growth of 5.7 per cent compared with the same period a year earlier, but services expanded 8.4 per cent, while retail sales shot up 10.9 per cent.
Fixed-asset investment climbed 10.3 per cent in the first nine months, below estimates of 10.8 per cent and the slowest pace since 2000.
"The latest report should alleviate concerns of a 'hard landing', as rebalancing in China's economy has provided room for a greater role for tertiary sector and household consumption as well as private-sector participation," UOB analyst Suan Teck Kin noted.
The data led Asian markets to retreat while China stocks ended flat on profit-taking after initial gains. Oil prices fell in the region on concerns that demand from the world's top energy guzzler is slowing.
Chinese leaders have been trying to reassure jittery global markets for months that the economy is under control after the shock yuan devaluation and stock market plunge in May fanned fears of a hard landing.
Interest rates have been cut five times since last November and infrastructure spending has been boosted in recent months to keep growth from sliding too far below this year's target of about 7 per cent.
But a slowdown in property investment and excess industrial capacity have hit manufacturing.
Financial services provided a temporary boost to growth earlier this year amid the share-buying boom but the stock market crash in August increased fears that growth would slump in this half so yesterday's figures are causing some economists to question the data. "We think the official figures are currently overstating growth by a wide margin," Capital Economics analyst Julian Evans-Pritchard said.
"Flaws with how the GDP deflator is calculated, along with political pressure to meet growth targets... have meant that official growth rates have not slowed nearly as quickly" as third-party expectations, he added. Economists now predict a further interest rate cut and a reduction in the amount of cash banks must hold before the end of the year.
"Today's data points to some signs of stabilisation in the Chinese economy, but challenges remain," HSBC analysts Julia Wang and Jing Li said in a report. "More policy easing should help generate a modest growth pickup in the fourth quarter."