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China's economy grows 6.9pc in first quarter of 2017

17 Apr 2017, 10:33

AFP
File Photo: AFP

Beijing, China: China’s economy grew 6.9 per cent in the first quarter of 2017, government data showed Monday, beating expectations in the latest sign of stabilisation in the world’s second-largest economy.

The reading was better than the median analyst expectation of 6.8 per cent in an AFP poll.

‘The national economy in the first quarter has maintained the momentum of steady and sound development,’ the National Bureau of Statistics said in a statement.

It added that ‘positive changes kept emerging and major indicators performed better than expected’.

The government has trimmed its 2017 GDP growth target to ‘around 6.5 per cent’ as the world’s second-largest economy, already expanding at the slowest pace in a quarter-century, faces an array of challenges.

The economy grew 6.7 per cent in 2016, its slowest rate since 1990.

‘For the first time in the recent years, China starts a year with a strong headline GDP,’ Raymond Yeung of Australia & New Zealand Banking Group told Bloomberg.

‘Thanks to strong investment and property, the economy is performing well.’

Beijing has said it wants to reorient the economy away from relying on debt-fuelled investment and towards a consumer-driven model, but the transition has proven challenging, leading to the slower growth readings in recent years.

Monday’s data also showed China’s industrial output growth rose to 7.6 per cent year-on-year in March, beating an estimate of 6.3 by Bloomberg News.

Retail spending rebounded to a forecast-beating 10.9 per cent, while fixed-asset investment rose 9.2 per cent in the first three months of the year, representing a slight acceleration from February.

The readings follow data showing robust foreign trade and a further expansion in factory activity driven by a pickup in production and demand last month.

‘China’s economy is currently expanding fairly close to the official rate,’ Julian Evans-Pritchard of Capital Economics said in a note, adding that the growth ‘will likely extend into Q2’.

But the growth momentum is not expected to last through the whole year, he added, as the abundant credit growth that fuelled the economic recovery is ‘now being reversed, (and) we still expect the economy to begin slowing before long’.

Cheap credit has bolstered the construction sector since last year, attracting savers and speculators who have fuelled housing prices in large cities and accelerated manufacturing activity.

According to the AFP poll’s median full-year forecast, China’s GDP growth will fall to 6.6 per cent overall in 2017.

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