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