TO THE POINT: The National Bureau of Statistics released economic data for the third quarter of this year, painting a pleasant picture of the Chinese economy. GDP went up 9.6 percent in the third quarter year on year, but the consumer price index is causing concerns about inflation. The central bank raised interest rates for the first time in three years. Meanwhile, the country maintains its appeal to foreign investors as FDI grows. China bought $21.7 billion in U.S. Treasury securities in August. The aviation sector thrives thanks to a surge in air traffic.

By HU YUE

Q3 Economic Figures

GDP

China's GDP grew 9.6 percent in the third quarter from the same period last year. The growth rate slowed down from 11.9 percent in the first quarter and 10.3 percent in the second quarter.

GDP in the first three quarters grew 10.6 percent year on year, 2.5 percentage points faster than one year ago.

CPI and PPI

The consumer price index (CPI), an effective gauge of inflation, grew 3.6 percent in September. This represented a 23-month high and was 0.1 percentage point higher than in August. The index for the first three quarters increased 2.9 percent.

In September, the producer price index (PPI), a major measure of inflation at the wholesale level, was on par with August at 4.3 percent. The PPI for the January-September period increased 5.5 percent.

Investment in fixed assets

The investment in fixed assets stood at 19.22 trillion yuan ($2.88 trillion) in the first three quarters, surging 24 percent from a year earlier. The real estate investment was 3.35 trillion yuan ($502.41 billion) from January to September, soaring 36.4 percent year on year.

Retail sales

China's retail sales of consumer goods leapt 18.3 percent year on year to reach 11.1 trillion yuan ($1.66 trillion) in the first nine months.

Residents' income

The per-capita disposable income of urban residents came in at 14,334 yuan ($2,149) for the first three quarters, up 10.5 percent year on year. The per-capita cash income of farmers grew 13.1 percent from the previous year to 4,869 yuan ($730).

Money supply

The broad money supply (M2), which covers cash in circulation and all deposits stood at 69.6 trillion yuan ($10.43 trillion), at the end of September, representing a growth of 19 percent year on year, said the central bank.

Interest Rate Hike

The People's Bank of China, the central bank, on October 19 announced to raise the benchmark one-year lending and deposit rate by 0.25 percentage points.

The one-year deposit rate will be 2.5 percent, and the one-year lending rate will stand at 5.56 percent, effective on October 20.

This is the country's first interest rate hike since December 2007, and the surprise move is widely considered an effort to cushion growing inflationary pressures and dampen the real estate market.

The move is reasonable since the consumer price index has been hovering at a relatively high level, said Li Daokui, a member of the Monetary Policy Committee of the central bank and a professor at the Tsinghua University's School of Economics and Management.

In addition, the Chinese economy has steered a steady course of growth, leaving room for the policymakers to fight inflation, he said.

Zuo Xiaolei, chief economist at the Beijing-based China Galaxy Securities Co. Ltd., believed the monetary tightening will put a freeze on investments in the property sector.

"But such a modest interest rate hike is not enough to force down the property prices," she said. "Further interest rate increases are likely to be already on the way."

Capital Destination

China has become a hotspot for investors from all over the world.

Foreign direct investment (FDI) inflows grew 6.14 percent in September year on year to reach $8.384 billion, compared with $7.602 billion in August, said the Ministry of Commerce (MOFCOM). This represents the ninth consecutive month of growth since August 2009.

The September figure brought the amount for the first three quarters to $74.34 billion, soaring 16.6 percent from a year earlier. The manufacturing industry has been the favorite destination, absorbing 47.6 percent of the total, followed by 45 percent for the service sector.

From January to September, the country approved 19,209 foreign-funded companies, surging 17.5 percent from one year ago.

With the broader economy picking up momentum, FDI of the country has recovered to pre-crisis levels, said Yao Jian, spokesman of the MOFCOM.

Besides this, the investment structure has continued to improve, he said. For example, the relatively underdeveloped western areas experienced a 48.8-percent surge in FDI in the first three quarters, 32.22 percentage points higher than the national average.

Taking to the Air

After a year of flying low, China's aviation industry is getting back on the track of fast growth.

The industry generated 7.36 billion yuan ($1.1 billion) in profits in September, compared with only 460 million yuan ($69 million) for the same period last year, said the Civil Aviation Administration of China (CAAC). Of this total, domestic airlines earned 6.64 billion yuan ($1 billion), and airports raked in 290 million yuan ($43.5 million).

The market turnaround stems from a significant surge in air traffic. In September, passenger volume expanded 17 percent year on year to 22.6 million, and cargo volume grew 9.1 percent from one year ago to reach 515,700 tons.

The industry has gained strength from a tourism boom, as well as thriving foreign trade, said Mao Ang, a transport analyst at the China Galaxy Securities Co. Ltd.

To lift the aviation industry, the government has also announced in May to waive business taxes on airlines' international routes to help them explore overseas markets.

The big carriers, in particular, will gather steam as the August plane crash in Yichun, Heilongjiang Province, hurt customer confidence for smaller rivals, said Huang Jinxiang, an analyst at the Bohai Securities Co. Ltd.

Adding U.S. Securities

China increased its holdings of U.S. Treasury securities by $21.7 billion in August to $846.7 billion, retaining its position as the largest foreign holder of U.S. government debt, said the U.S. Department of Treasury. The country resumed net purchases in July after two consecutive months of net sales.

Japan, the second largest foreign holder, also remained a net buyer in August, boosting its portfolio to $836.6 billion from $821 billion the previous month. Total holdings of Treasury securities by all foreign countries were $2.28 trillion, an increase of 1.4 percent from July.

Analysts believe the U.S. government bonds remain a safe haven for investors as uncertainties hang over the prospect of the world economy. Recovery of the U.S. economy and the European debt woes also beefed up flow of foreign investments into the United States, they said.

The August purchase also helped soothe worries that Washington's largest creditor was moving away from dollar assets. On October 15, the U.S. Government reported that the federal budget deficit totaled $1.3 trillion for the 2010 budget year, which ended on September 30, down $122 billion from the record $1.4 trillion deficit set in 2009.