Analysts at RBC Capital Markets claim that Chinese third quarter economic data released today shows that the country’s economic growth declined only slightly. In their view, conditions are stabilizing that means that Chinese economy is strong enough for further gradual monetary policy normalization.

RBC strategists expect that Chinese rates will be raised by another 50 basis points during 2011, while the pair USD/CNY will be at 6.20 by end of next year. It’s possible that the moves of the rate will be more substantial, note the analysts.

Annual GDP growth dropped from 11.9% in Q1 and 10.3% in Q2 to 9.6% in Q3. Inflation reached new maximum with consumer prices 3.6% up in September compared with 3% increase in August. RBC underlines that China still has much to do in order to keep its economy on even keel.

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