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China GDP Infographic

The economy of China grew by 6.7 percent in the third quarter on the back of increased government spending, a booming property market and increased bank lending to allay fears of a slowdown in the concluding part of this year.

Data released by the National Bureau of Statistics on Wednesday showed that China's gross domestic product (GDP) has now grown at the same rate of 6.7 percent over the past three quarters, indicating some level of stability is being witnessed in the economy. It also shows the government is well on its way to achieving its official growth target of 6.5 to 7 percent for the year.

"The national economic performance has been generally steady, making progress and improving in quality, resulting in growth that's better than expected," NBS spokesman Sheng Laiyun said.

The year-on-year growth see in Chinese GDP in the third quarter was in line with expectations of analysts polled by Reuters. The quarterly growth of 1.8 percent posted was also as expected by analysts.

The steady growth recorded over the last three quarters was driven by increased spending by government on infrastructure projects and a booming property market. These have raised demand for construction materials, ranging from cement to steel.

Record growth in the number of loans granted by banks has also contributed.

In the first three quarters of 2016, consumption accounted for about 71 percent of growth in the GDP, up from 66.4 percent in the year before. This indicates contracting net exports and some level of success in the government's efforts to cut back on over-dependence on investment-led growth.

While the government may be on the way to achieving its target of 6.5 to 7 percent annual growth, economists have cautioned that its seeming readiness to do anything to meet hard targets may end up hurting the economy. They say stimulus measures, which may help in the short term, can cause long-term problems by diverting attention from the count growing corporate debt and industrial challenges.

The International Monetary Fund (IMF) estimates corporate debt in China at roughly 145 percent of its GDP. In a recent working paper it released, the organization urged the government to take decisive measures to urgently tackle the problem before it "becomes systemic."

The real estate market is considered the biggest near-term risk to China's economy for now. Home sales and real estate investment has quickened in recent months. In the first three quarters of the year, housing sales jumped 43.2 percent from a year ago. Mortgages, which make up a large part of record loans being made in the country, contributed significantly to the performance.

But authorities in over 20 Chinese cities have introduced restrictions on buyers to guard against speculation. On Tuesday, Shanghai said it had penalized some property agencies for contract falsification and was investigating developers thought to have inflated prices.

Increasing restrictions are believed to have contributed to a sudden decline in sales in recent weeks. Economists fear these restrictions may lead to undesirable effects on the market.

Strong growth in the economy is expected to continue through the end of 2016. Economists expect a slowdown in 2017 as the property market cools and coal and steel industries' production capacity is further cut back.

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