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China's economic growth weakest in five years

Is China's economy finally cooling off?

Statistics released Tuesday said China's gross domestic product grew by 7.3 percent during the third quarter. Those are good numbers for almost any national economy, but it's the weakest showing for China's economy in more than five years.

Officials say that, considering ongoing efforts at financial restructuring and a weakness in China's overall real estate market, the relatively lower numbers are of minimal concern.

"Despite the slowdown, China's economy managed to realize a generally stable growth this year with relatively low inflation and high employment," Sheng Laiyun, spokesman for the National Bureau of Statistics, said in a statement quoted by the Shanghai Daily.

"The country integrated economic reforms into its general policies," he continued, "ensuring the improvement of people's livelihood and keeping the growth at a reasonable range to sustain the growth momentum."

Analysts outside of China note the 7.3 percent GDP figure is still better than expected -- but they appear mixed when it comes to prognostications about where the Chinese economy goes from here.

"Today's data suggest that slowing investment, particularly in the property sector, continues to put downwards pressure on growth," Julian Evans-Pritchard at Capital Economics said in a research note.

"That said, healthy consumption growth and strong foreign demand mean the economy has held up better than many had feared."

Evan-Pritchard says there is always a "degree of skepticism" about the accuracy of the Chinese figures, and that his group's data suggest a slower pace of growth than the headlines. But he also notes the current numbers are consistent and in the expected data trajectory.

The GDP "target was always intended to be flexible," he added, "and we don't think policymakers will panic as a result of the slowdown given that it remains highly concentrated in a few sectors suffering from overcapacity and that the broader economy and labor market remain healthy."

But another China economist, Wei Yao with French bank Societe Generale, was more concerned, saying those third-quarter GDP figures were strengthened by a "seemingly solid rebound" in China's industrial production.

"We notice that the resilience resulted entirely from external demand," she said, "while domestic investment saw little improvement in the absence of any decisive signs of improvement in the housing sector."

And putting these figures into a global context, she added, "this is hardly good news, especially for those commodity-exporting economies."

And while there have been calls for some form of economic stimulus, Brian Jackson, China economist at IHS, believes Beijing is being prudent as it works to reform and radically change the Chinese economy.

"While there are certainly sectors that are experiencing deceleration or even contraction within China, particularly within heavy industries, the change in the composition of output is hardly a new thing for China or indeed most fast-developing countries," he said in a client note.

Jackson believes China's leaders will continue to push for more job stability and growth, as well as a reduction of systemic risk.

Those two factors, he said, translate "into [a] hesitance to strongly stimulate via debt-driven investment in heavy industry and instead to encourage greater service sector development, where employment tends to be more labor intensive."