The Chinese government said Friday its growth in the July to September quarter was 7.8 per cent, as its economy rebounded from three quarters with no acceleration.

The rebound was driven partly by a government "mini-stimulus" that pumped money into the economy through higher spending on construction of railways and other public works.

In the previous quarter, Chinese growth was 7.5 per cent, a two-decade low that reverberated throughout the world in lower commodity prices and fewer imports.

That news, combined with relief over a deal in Washington over the debt limit, send markets higher on Friday.

The TSX closed up 99 points at 13,136 and the Dow was up 28 points to 15399. The Standard and Poor's 500 climbed 11.35 points to 1,744.50, a record high for the second day in a row.​

China’s government has been struggling with the abrupt decline in global demand for its goods that followed the 2008 recession.

Earlier this year, Premier Li Keqiang spurred factory output, built rail lines and relaxed measures that had been put in place to tame a housing bubble so the economy would meet the government’s expansion goal for 2013.

There has been doubt cast on China’s growth figures, because company results are not transparent and it remains a planned economy. However a group of Western economists estimated last month that it would achieve 7.8 per cent growth in the quarter.

Among the firm indicators are a 10.2 increase in industrial production, a 13 per cent rise in retail sales and a 34 per cent rise in home sales.

China would like to transition its economy to greater dependence on domestic consumption, rather than relying so heavily on exports.

The spike in third quarter growth is likely to be followed by a slower pace toward the end of the year, analysts said, adding that the government will pull back on its stimulus.

“The new government under Premier Li Keqiang will prevent further quickening of credit growth, will choose not to further expand its mini fiscal stimulus and will likely tone down their pro-growth rhetoric,” Lu Ting, head of Greater China economics at Bank of America in Hong Kong, said in a note today.

At a time when growth in the U.S. may have been dragged back to under two per cent by the budget impasse, China is still regarded as a bright spot in the world economy, buoying investor hopes.

With files from the Associated Press