CHINA ECON­OMY

Growth sup­ported by strong bank lend­ing, govt in­fra­struc­ture spree, among oth­ers

New Straits Times - - Business World -

BEI­JING spend­ing and a re­bound in the real es­tate sec­tor,” said Zhou Hao, a Sin­ga­pore-based econ­o­mist at Com­merzbank.

China has cut its growth tar­get to around 6.5 per cent this year to give pol­i­cy­mak­ers more room to push through painful re­forms to re­duce fi­nan­cial risks cre­ated by years of debt-fu­elled stim­u­lus. The world’s sec­ond-largest econ­omy grew 6.7 per cent last year, the slow­est pace in 26 years.

China’s first-quar­ter eco­nomic growth could ac­cel­er­ate to seven per cent year-on-year, from 6.8 per cent in the last quar­ter, econ­o­mists at OCBC wrote in a note last week.

But OCBC and many other China watch­ers ex­pect that pace would be­gin to slow as the pay­off from last year’s stim­u­lus spree be­gins to fade.

“This strength re­mains heav­ily re­liant on rapid in­vest­ment growth that will be dif­fi­cult to sus­tain given clear sig­nals that the fis­cal and mon­e­tary pol­icy stance will be less sup­port­ive this year,” says Ju­lian Evans-Pritchard, a Sin­ga­pore-based China Econ­o­mist at Cap­i­tal Eco­nomics.

China also in­tro­duced a new in­di­ca­tor for the ser­vices sec­tor to bet­ter track the vast range of ac­tiv­ity from movies to restau­rants that now ac­count for more than half of the econ­omy.

The ser­vices out­put in­dex rose 8.2 per cent in Jan­uary and last month from a year ear­lier on growth in tech­nol­ogy, trans­porta­tion, and de­liv­er­ies, said the Na­tional Bu­reau of the Sta­tis­tics yes­ter­day in the first re­lease of the in­dex. It plans to up­date the mea­sure each month.

The NBS said the in­dex tracked the out­put of ser­vices, also known as the ter­tiary sec­tor, with­out de­duct­ing the in­put costs, which meant it was dif­fer­ent to a quar­terly re­port re­leased with the gov­ern­ment’s data on gross do­mes­tic prod­uct. The in­creased fo­cus on ser­vices un­der­scores the sec­tor ’s in­creas­ing im­por­tance as China tran­si­tions away from old smoke­stack in­dus­try driv­ers and ex­port-led growth.

Mean­while, China’s prop­erty sales surged in the first two months, de­spite gov­ern­ment mea­sures to cool the mar­ket, though growth in real es­tate in­vest­ment showed signs of eas­ing, ac­cord­ing to of­fi­cial data yes­ter­day.

Prop­erty sales by area rose 25.1 per cent year-on-year in Jan­uary and last month.

That was above the 22.5 per cent an­nual gain last year, which was the strong­est an­nual growth in seven years, thanks to a prop­erty boom in top-tier cities.

It was also a marked surge from De­cem­ber, when prop­erty sales by area rose 11.8 per cent from a year ear­lier, ac­cord­ing to Reuters’ cal­cu­la­tions. Agen­cies

EPA PIC

China’s prop­erty sales surged in the first two months of they year de­spite gov­ern­ment mea­sures to cool the mar­ket, though growth in real es­tate in­vest­ment is show­ing signs of eas­ing.

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