Positive development

Though economic growth declined in the third quarter, some economists say the government target of 7.5 percent growth for the whole year - scaled down from the earlier 8 percent target - can still be achieved and the slowdown is a good sign for China's economy in the long run.

"It's very important to note that this slowdown is potentially a positive development in the long run, as slower growth is a necessary condition for rebalancing and higher-quality growth in the economy," says Andrew Polk, resident economist of the Conference Board China Center for Economics and Business in Beijing.

"Inflation is currently subdued, but remains a concern especially if international food prices continue rising the best path forward for China is to continue slowing at a moderate pace."

John Ross, visiting professor at the Antai College of Economics and Management of the Shanghai Jiao Tong University, also expresses similar views.

"The most important economic issue is the well-being of the population and low inflation helps achieve this," he says. "This is more important than gaining a small extra GDP growth, especially the growth results in higher inflation."

Citibank analysts Shuang Ding and Minggao Shen opine that that the increase in furniture and construction material sales during the third quarter has been striking and more reflective than housing transactions during the same period last year.

"Overall there was a recovery in domestic demand and a reduction in external risks during the third quarter. We expect a fourth-quarter rebound," the two economists said in a recent research report.

Sun Junwei, a China economist at HSBC, says September growth indicators have exceeded all previous expectations.

"Going forward, a benign inflation outlook provides enough room for additional monetary and fiscal easing. The filtering-through of policy easing coupled with the stabilization of the property market should support a mild growth recovery in the coming months," he says.

Earlier this week, Premier Wen Jiabao indicated that after his meetings with economists, business executives and local government officials, he remained confident that China's economy had taken a turn for the better during the third quarter and given enough indications that the overall economic situation is stabilizing.

"The present policies seem to be basically correct, even though I had criticized them earlier in the year as I felt they were launched a bit too late," says Ross from Antai College. "The important thing is that the already announced investment and consumer stimulus has more than delivered."