China's economy slowed marginally in the third quarter but is well on course to beat the government's annual target, cementing Xi Jinping's standing as he prepares to be handed a second term in power at a key Communist Party conclave.

The world's number two economy expanded 6.8 percent in July-September, but while the figures release on Thursday were slightly down from the 6.9 percent of the previous two quarters it indicated stability after a years long slowdown in growth.

"The national economy has maintained the momentum of stable and sound development in the first three quarters, with favourable factors accumulating for the economy to maintain medium-high rate of growth," said National Statistics Bureau spokesman Xing Zhihong.

"However, we must be aware that international conditions remain complicated and volatile and the national economy is still at a crucial stage of restructuring with the foundation for sound development yet to be consolidated."

While well off the breakneck rates of a decade ago, the reading was in line with a survey of analysts by AFP and put the economy well on course to eclipse the official target of about 6.5 percent for the whole year.

The economy grew 6.7 percent last year, which was its slowest pace for more than a quarter of a century.

- Key reforms -

The readings come as Xi is set to secure another five-year term as the party's general secretary at the highlighly choreographed week-long congress, which he is expected to use to surround himself with loyalists at key leadership posts.

And analysts say he now has a chance to push through key reforms.

"Relatively strong economic performance this year offers a good opportunity for the government to address several long-term economic issues," Raymond Yeung, chief Greater China economist at Australia & New Zealand Banking Group in Hong Kong, wrote in a recent report.

"Xi also needs to shift China’s economy from a credit-intensive, property-led growth model to one that supports sustainable growth," he said, according to Bloomberg News.

Beijing has for years been trying to transition the economy from one reliant on exports and state investment to domestic consumption.

And Thursday's figures suggest their work is paying off. Brisk consumer spending and strong factory output fuelled economic growth in July-September, while retail sales rose 10.4 percent on-year during the first three quarters.

"Consumption is the stabilising factor of the economy, and industrial output actually quickened in September," Grace Ng, an economist at JPMorgan Chase & Co. in Hong Kong, said.

The services industry contributed the majority of China's economic growth, according to the Statistics Bureau, and in line with sentiment expressed on Wednesday by Xi.

"China's economy has been transitioning from a phase of rapid growth to a stage of high-quality development," Xi told an audience of 2,300 party leaders when he opened the congress on Wednesday.

- Debt worries -

He emphasised this point by leaving out new growth targets from his speech. His predecessor Hu Jintao made doubling the country's GDP by 2020 a key point of his opening remarks at party gathering in 2012 and in 2007 pledged to double per capita income.

Less pressure for high growth could roll back the policy stimulus that has caused China's debt to spiral to levels that have led to two sovereign rating downgrades and warnings of a financial crisis.

The soaring debt is most concentrated in China's state-owned enterprises, which have continued overbuilding and overproducing for example with a glut of steel. 

The latest figures showed some progress on that front, with the debt to asset ratio, one measure of leverage, at China's largest industrial enterprises ticking downwards slightly from last year.

The NSB's Xing said China had continued "the work of cutting overcapacity, reducing excess inventory, deleveraging". 

But Xi made it clear market forces would not be used to constrain the state-owned companies' ambitions or decisions.  

"We will support state assets in becoming stronger, doing better, and growing bigger," he said in his speech, a nod that China's massive state-owned enterprises would continue to hold sway in the economy for years to come.