China growing faster than expected

Paterniano Del Favero
Aprile 21, 2017

GDP growth in the first three months, marking the quickest pace since the last quarter of 2015, was 0.1 percentage point higher than the 6.8 percent in the fourth quarter of past year, the National Bureau of Statistics said on Monday.

It indicates that from January to March past year, the GDP reached 18.07 trillion yuans (2.63 trillion dollars).

The growth was well above the full-year target of 6.5 per cent, and the 6.8 per cent increase registered in the fourth quarter of 2016, China's National Bureau of Statistics said. 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.

During the first quarter, investment in fixed assets such as factories expanded 9.2 per cent from a year earlier, while retail sales grew 10 per cent.

The International Monetary Fund has urged the Chinese government to focus on tackling the country's high levels of corporate debt.

"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.

In February this year, state-run Xinhua news agency has quoted China Banking Association as saying that the country's bad loans totalled to a whopping Dollars 220 billion last year.

China is seeking to maintain stability in the property market this year after the roller coaster ride of 2016, with measures to prevent surges in metropolises and the growing inventories in small cities. Adams notes that credit growth was moderate in the first quarter.

The official data released Monday show that the world's second-biggest economy grew at a slightly faster pace in the January-March period compared with the previous quarter's 6.8 percent expansion.

The government has trimmed its 2017 GDP growth target to "around 6.5 per cent". Meanwhile, the service sector rose 7.7 percent year on year in the first quarter, outpacing a 3-percent increase in agriculture and 6.4 percent in the secondary industry. Economists at ANZ reckon growth may even clock in at 6.9 percent in the quarter, pointing to strong property and infrastructure investment.

China's export outlook also brightened considerably on Thursday as it reported forecast-beating trade growth and as U.S. President Donald Trump softened his anti-China rhetoric in an abrupt policy shift, though the risk of U.S. protectionist trade action is by no means off the table.

China's economy stormed back to power 1/3 of global growth in 2017 and its government is making progress in restraining runaway credit growth. "The curbs are oppressing the market but prices may double next year (when the curbs are removed)", property investor Xu Zhenghua said.

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