INSTANT VIEW: China Q3 GDP growth rises to 8.9 percent

BEIJING (Reuters) - China's annual GDP growth accelerated to 8.9 percent in the third quarter from 7.9 percent in the second quarter as all sectors of the economy, apart from exports, performed strongly.

The figures were released a day after the cabinet signaled a shift toward policy normalization by saying that recovery in the world's third-largest economy had now been 'consolidated'.

KEY POINTS:

-- Economists had forecast 8.9 percent Q3 GDP growth yr/yr

COMMENTARY:

LI JINGDE, VICE GENERAL MAGAGER OF CINDA SECURITIES:

"The sizable drop in PPI indicates that the economy is indeed reviving but the recovery has not exceeded market expectations,

"I think CPI could turn positive by the end of this year, possibly in December. This is mainly because commodity prices will keep rising in the fourth quarter and early next year, which will lift prices of products in other industries.

"The GDP growth rate might rise to 9.3-9.5 percent in the last quarter, and there's no doubt that China will hit its target of 8 percent for the whole year. But I think the growth rate might drop in the second and third quarters next year."

YU SONG AND HELEN QIAO, ECONOMISTS AT GOLDMAN SACHS, IN A NOTE:

They said implied sequential quarter-on-quarter annualized growth in GDP was around 10.2 percent in the third quarter, down from 16.5 percent in the second quarter.

"Due to policy measures the government implemented since July that have an evident tightening impact, especially the credit control measures implemented by the CBRC, the slowdown in sequential GDP growth has been more significant than we previously expected. However, the sequential GDP growth level is still respectable and is slightly above our estimated potential growth level.

"On a sequential basis, both CPI and PPI inflation have been out of negative territory over the past three months. Using this criteria, we believe deflation is probably behind us now.

"On the other hand, we see limited upside inflationary pressures as long as the government is able to continue to control money and credit supply at the current pace."

BRIAN JACKSON, STRATEGIST AT ROYAL BANK OF CANADA IN HONG KONG, IN A NOTE:

"The Chinese economy has taken off, but it is flying on one engine. China's recovery has been impressive but it has been heavily reliant on government-directed investment funded by aggressive bank lending.