China’s economic growth is likely to have picked up slightly in the first quarter of the year, according to an Agence France-Presse poll of analysts, but they say the rebound is fragile and key data is unreliable.
First-quarter GDP for the world’s second-largest economy is due to be announced today and the median forecast in the poll of 12 economists was for an 8 percent increase year-on-year.
That would be a notch up from the 7.9 percent attained in the final quarter of last year, which snapped seven straight quarters of slowing growth and raised hopes of a stable recovery as other major economies remain relatively weak.
China’s economy grew 7.8 percent last year, its slowest rate in 13 years, and authorities have kept their growth target for this year at a conservative 7.5 percent.
In an effort to boost the economy, Beijing last year relaxed monetary policy and access to credit, while keeping a eye on politically-sensitive price increases.
Inflation remains moderate, coming in at just 2.1 percent last month year-on-year, but could speed up because of a rapid increase in credit in January and last month.
“While retail sales remained subdued in the first quarter on the government’s initiative to crack down [on] corruption and official [extravagance], real-estate sales and car sales are much stronger than expected,” ANZ Bank economist Liu Ligang (劉利剛) said.
However, home sales surged due to a rush of purchases ahead of expected new restrictions meant to curb speculation, Liu said, indicating that improvements in the sector might not last.
China’s leaders have vowed to rebalance the economy away from reliance on traditional growth drivers investment and exports and toward consumer demand, but that is not proving easy.
“The economy is still mainly supported by infrastructure projects ... which is absolutely unsustainable,” said Shen Jianguang (沈建光) of Mizuho Securities Asia in Hong Kong.
“Electricity [consumption] in March had zero growth, which means investment demand was very weak because of overcapacity,” he added.
Last month’s trade figures showed a small, but still surprising, deficit of US$880 million, a rarity in a country that normally records surpluses, and analysts viewed the figure with skepticism.
Exports to Hong Kong — which are often re-exported to other destinations — grew 93 percent last month while those to the EU and the US fell 14 percent and 7 percent respectively, IHS Global Insight’s Alistair Thornton and Ren Xianfang (任現芳) said.
“This seems a little incongruous, to say the least,” they wrote in a report.
They added that some declared exports could have been used to disguise capital inflows into China, or to exploit tax rebates on overseas sales, or for political reasons.
“Either the trade data is unreliable, or if it is reliable, then what are being booked as exports are not actually exports,” they added.