Out with the sluggishness
International Monetary Fund raises its forecast for China’s growth next year from 6.3% to 6.5%, reports.
Has China’s economy finally turned the corner? Although first quarter GDP growth figure of 6.7 percent published on April 15 was the slowest since the financial crisis, most of the recent economic data now points to the economy stabilizing.
Growth was boosted by a revival in the housing market with property investment rising by 6.2 percent, its fastest pace for a year, and by a 10.7 cent increase in fixed-asset investment, mainly on infrastructure projects.
There is also evidence the economy is continuing to restructure away from manufacturing and traditional industries, with services growing at 7.6 percent —accounting for 56.9 percent of total GDP growth.
The economy also generated 3.18 million jobs in the first quarter, just under a third (31.8 percent) of the government’s target for the whole year.
Most of the indicators pointed to China shaking off some of the sluggishness that was particularly evident in the second half of last year.
The International Monetary Fund immediately raised its forecast for China’s growth this year from 6.3 to 6.5 percent in line with the government’s official forecast of between 6.5 and 7 percent.
The GDP figures were published only two days after the announcement of a surge in China’s trade performance, with exports increasing 18.7 percent in March, after falling in January and February, and imports falling just 1.7 percent, compared with an 8 percent fall the previous month.
Sheng Laiyun, a spokesman for the National Bureau of Statistics, said the first-quarter performance suggested a new momentum for the economy.
“We have no reason not to conclude that the Chinese economy has had a good start (to the year),” he said.
Louis Kuijs, head of Asia economics at Oxford Economics, believes there are finally grounds for optimism
“There is some life in the economy that there wasn’t a few months ago, especially in the physical sphere with the pickup in real estate and even in heavy industry with more steel being required for the extra construction,” he said.
One of the questions that remained was how much the improved performance was down to credit expansion.
Total social financing, which includes bank lending, local government bonds (and also swapping debt for bonds) as well as shadow banking, rose 6.59 trillion yuan ($1.02 trillion) in the first quarter, said the People’s Bank of China.
While this was a clear demonstration of the government’s commitment to boost the economy, there were also concerns that the resultant fillip to growth might only serve to further stoke up debt in the longer term.
We have no reason not to conclude that the Chinese economy has had a good start (to the year).” spokesman for the National Bureau of Statistics
A worker sorts out boxes in a delivery company in Changsha, Hunan province. The services sector contributed much more than industry to the GDP growth.