China's economy expanded a blistering 8.9 percent in the third quarter, fueled by lavish government stimulus spending that has helped the nation spearhead recovery from the global recession.

Growth in the world's third-largest economy accelerated from 7.9 percent in the second quarter and for the first nine months of the year was 7.7 percent, the National Statistics Bureau said Thursday.

Officials have said they expect the economy to at least reach the annual growth target of 8 percent.

The consumer price index (CPI), a main gauge of inflation, was up 0.4% in September from the previous month, said the National Bureau of Statistics. The CPI dipped 1.1 percent year on year in the first nine months.

The producer price index (PPI), a major measurement of inflation at the wholesale level, dropped 6.5 percent year on year in the first three quarters of this year. The September PPI rose 0.6 percent from a month earlier.

China's retail sales in the third quarter of this year rose 15.1 percent year on year, or 17.0 percent after deducting price factors, said the National Bureau of Statistics.

Fixed-asset investment in the first nine months increased by 33.4 percent year-on-year, according to the National Bureau of Statistics.

Fixed-asset investment in urban and rural areas rose 33.3 percent and 33.6 percent respectively, compared with the same time last year.

Industrial output rose 8.7 percent in the first three quarters of the year, and 12.4 percent in July-September - signaling accelerating demand, the statistics bureau said.

China has countered the global downturn with a 4 trillion yuan ($586 billion) stimulus plan involving massive spending on infrastructure such as rail and roads to pump up the domestic economy as exports slumped.