China’s economy expanded 6.7 per cent in the first quarter from a year earlier, data from the country’s statistics agency showed on Friday, amid signs that the world’s second largest economy is picking up steam.
Advertisement
It represented the weakest pace of growth since the first quarter of 2009 – the height of the global financial crisis – for the world’s second biggest economy, whose stuttering performance has prompted a turbulent period for global markets in recent months.
RETAIL SALES: Despite worries over layoffs, Chinese consumers are still avid spenders and retail sales rose 10.3 percent from a year before, up from 10.2 percent in October-December.
China’s economy grew 6.9 percent in 2015.
Whether China continues to recover, or resumes its slide toward slower growth, may depend on how much oomph is left from prior easing and whether its effect spreads beyond property and government-led projects.
Investment in real estate development surged 6.2 per cent in the first quarter from a year earlier, extending the increase from the first two months when it reversed a two-year falling streak to gain 3 per cent. Authorities have taken a slew of measures to mitigate the downshift, cutting interest rates, reducing taxes, slashing overcapacity and initiating reforms to improve efficiency.
Factory output rose to 6.8 percent in March, well above the average of 5.9 predicted by many analysts.
“What this shows is a stabilisation of the old economy”, said Raymond Yeung of ANZ, pointing to recovery in industrial production and fixed asset investment. But that allows room for more stimulus if needed.
But she said it may “further increase longer term imbalances” if it encourages more investment by inefficient state-owned enterprises (SOEs).
To reduce investor focus on the yuan’s exchange rate against the USA dollar, China began publishing a new yuan exchange rate against a basket of currencies in December.
The fast growth of some new growth engines, such as internet-related sectors and advanced manufacturing, is also encouraging, the NBS said.
As an unexpected bonus, the People’s Bank of China (PBOC) also released new bank lending figures for March alongside the NBS data, with that too topping expectations.
“Today’s released data ought not to distract from the fact that the structural issues facing China’s economy remain unresolved”, wrote Economist Intelligence Unit economist Tom Rafferty in a research note. Many observers say the data gives at least a glimpse of the direction in which the economy is moving.
Advertisement
The numbers are in line with the goals set by the government during the period covered by the 13th Five Year Plan adopted by the Chinese Communist Party leadership in October last year, which sets a five-year annual GDP growth target range of 6.5 to 7.0 percent.
