China’s Q1 growth stabilizes at 6.8%

China’s growth stabilized in the first quarter thanks to rising investments and a recovery in exports, experts said, though they warned the reprieve may be temporary. According to an AFP survey of 16 economic analysts, the gross domestic product expanded 6.8 percent in the first three months of this year-the same level of growth as in the last quarter of 2016. The official GDP growth figure will be released tomorrow. “Our expectation is stable to stronger growth in the first quarter, based on faster industrial production and investment related mostly to the housing sector bubble and increased fiscal spending on infrastructure,” Brian Jackson of IHS Markit told AFP. 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. While the country attempts to rebalance its economy around services and domestic consumption, “the question we need to ask is whether China has returned to the same old property-driven model,” ANZ Bank’s chief economist for greater China, Raymond Yeung, told AFP.

‘Headwinds’

“Particular areas of focus for fiscal policy are infrastructure investment, public services, social welfare and social housing, and tax and fee reductions for businesses,” Oxford Economics analyst Louis Kuijs said in a research briefing last month. Beijing announced in March that it will maintain a 3 percent budget deficit, with 2.6 trillion yuan ($376 billion) invested this year in railway, road and waterway projects.

Foreign trade also showed improvement as US President Donald Trump backed down on calls for a trade war. Exports rebounded sharply in March while imports surged by 24 percent in the first quarter, reflecting strong domestic demand. But the momentum is not expected to last: according to the AFP poll’s median full-year forecast, China’s GDP growth will fall to 6.6 percent overall in 2017.