Published: Fri, April 21, 2017
Business | By Max Garcia

China Q1 GDP grows 6.9 pct y/y, better than expectations

It is encouraging to see credit growth slowing to a less unsustainable pace; an extended period in which nominal GDP growth outpaced credit growth would greatly allay concerns about the sustainability of China's growth model. "The strong growth and better external demand has provided room for a faster pace of countercyclical monetary policy tightening".

Gross domestic product increased 6.9 per cent in the first quarter from a year earlier, compared with a 6.8 per cent median estimate in a Bloomberg survey.

They said the government's announcement last month that it would build a vast new economic zone in the relatively unprosperous area of Xiong'an shows authorities have a "tendency to rely on infrastructure development to sustain growth".

Property sales recorded their strongest annual growth in seven years in 2016 with an annual gain of 22.5 per cent, thanks to a furious property boom in top-tier cities, which eventually spilled over to smaller neighbouring cities.

Growth last was that strong in the July-to-September quarter of 2015. China added 3.34 million new jobs in the first quarter.

Broad indicators of China's economic output rose much faster than expected in March, as the economy started the year off on a positive note.

China's economy grew 6.9% during the first quarter of 2017, with GDP amounting to CN¥ 18tn (£2.085tn, $2.6tn), the National Bureau of Statistics of China reported on Monday (April 17). Experts said government tigthening measures in the sector will show up by the third quarter.

"There's no doubt that China will achieve the (GDP) target", said Xu of the figure of at least 6.5 percent this year.

Consumption contributed 77.2 percent of the GDP increase in the first quarter.

In the first quarter, the index of national services production increased by 8.3 percent year on year, 0.1 percentage point higher than that of the same period last year.

China's total social financing, the government measure that encompasses total debt including bank loans as well as nonbank and other lending, rose by more than 11% past year. However, it is feared that the rebound in steel prices, which is driving the surge in output, will not last as there are already signs of rising inventory levels. It made up 44 percent of total new yuan loans in March, compared to 32.5 percent in February, according to Reuters calculations using PBOC data.

Though policymakers have pledged repeatedly to push reforms to head off financial risks and asset bubbles, the government is seeking to keep the economy on an even keel ahead of a major leadership transition in later this year.

"This is good for now but it makes it hard to see how China's economic slowdown will land in the future".

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