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Credit surge helps China record steady quarterly GDP growth of 6.7%

China's economy steadied in the third quarter as consumer spending surged, but there are concerns the growth is being built around an unsustainable bank lending boom.

Authorities in Beijing reported gross domestic product (GDP) rising 6.7% between July and September - better than many analysts had predicted following the 6.6% increase recorded in the previous quarter.

The National Bureau of Statistics said: "The national economy grew steadily with progress made and quality improved."

By progress, it means the country's efforts to transform its economy to one more driven by services as opposed to manufacturing for domestic expansion and trade.

The government has targeted 6.5%-7.0% growth for 2016, following 6.7% last year - the slowest rate in a quarter of a century.

It reported a 5.6% fall in exports in September alone due to weak international demand, but retail sales surged by more than 10% over the quarter.

Bank credit leapt 30% last month.

The rise in loans has also been credited with driving a surge in property prices but there are warnings national debt levels are unsustainable.

Repeated infusions of credit to prop up growth alongside massive infrastructure stimulus since the financial crisis meanS China's total debt is now the equivalent of 250% of GDP.

Earlier this month the International Monetary Fund warned the country's dependence on debt was growing at a "dangerous pace" and risked a "disruptive adjustment" in the financial system.

Beijing has responded with new house-buying regulations and some credit-tightening measures, which are now feeding through to the economy.

Julian Evans-Pritchard, of Capital Economics, said of the GDP figures: "The recent recovery is ultimately on borrowed time given that it has been driven in large part by faster credit growth and a property market boom.

"As the boost from policy stimulus begins to wear off, probably at some point early next year, continued structural drags mean the economy is set to begin slowing again."