China’s economic recovery is gaining traction, with growth rising to its fastest pace in more than a year in the January-to-March quarter.
The 6.9 percent annual pace of expansion, reported yesterday, surpassed economists’ forecasts and was an improvement from a 6.8 percent pace of growth in last year’s final quarter.
Growth last was that strong in the July-to-September quarter of 2015.
Photo: AP
Analysts said government spending and a property boom spurred by easy credit were the main factors helping to driving stronger demand.
China last year saw its slowest growth in about three decades at 6.7 percent.
The full-year economic growth target for this year is 6.5 percent.
“Currently, China’s economy is demonstrating good signs of pickup in growth, overall price stability, expansion in employment and improvement in the international balance of payments,” Chinese National Bureau of Statistics spokesman Mao Shengyong (毛盛勇) told reporters in Beijing.
Fears of being dragged into a trade and currency war with the US have abated after US President Donald Trump toned down his previously antagonistic comments against Beijing.
A summit earlier this month with Chinese President Xi Jinping (習近平) ended calmly and the US Department of the Treasury did not label China a currency manipulator in its latest assessment.
During the first quarter, investment in fixed assets, such as factories, expanded 9.2 percent from a year earlier, while retail sales grew 10 percent.
Industrial production rose 6.8 percent, including a stronger-than-expected 7.6 percent year-on-year gain last month.
Although exports have also shown sharp improvement, strong lending and investment figures suggest Beijing is relying on its traditional strategy of powering growth through government stimulus.
China’s leaders have been trying to shift to an approach based more on consumer demand, but tend to open the spending and credit taps at times when growth appears to be slowing too much.
“The question we need to ask is whether this investment-led model is sustainable as the authorities have trouble taming credit,” ANZ economists Raymond Yeung (楊宇霆) and David Qu (曲天石) said.
The latest figures indicate China’s economy is on track to meet its official growth target — a good sign for China’s leaders, who do not like surprises and are preparing for a twice-a-decade Chinese Communist Party congress in the autumn to appoint new leaders.
“The 6.5 percent target this year, you could say it’s more important than ever, because of the political reshuffle later this year,” Nordea Markets chief Asia analyst Amy Zhuang said. “At least being able to maintain the stability in growth is very, very important for Beijing.”
On a quarter-to-quarter basis, which is how other major economies report data, the economy lost steam, expanding just 1.3 percent.
That is slower than 1.7 percent in the fourth quarter of last year.
The economists at ANZ said such figures should be viewed cautiously because they might reflect changes in how the Chinese government made adjustments for seasonal factors.
Economists say they expect the boost from the government’s policies and the property boom to persist for a few more months before fading later in the year.
House prices will likely start cooling this year as tighter restrictions finally kick in, but Beijing will probably take steps to offset that decline with more stimulus to meet its annual growth target, Zhuang said.
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