China’s GDP figures show signs of recovery | Business News

China’s economy showed unexpected growth in the first quarter but it is still too early to announce a recovery, analysts say.

GDP rose by 6.4% in the three months to March compared to the same time last year, a result that was slightly above analysts’ expectations.

The economy grew by just 1.4% compared to the previous quarter but it was enough to encourage those who had worried about the effect of China’s sluggishness on the global economy.

Retail sales were better than forecast, helped by demand for home appliances and furniture, and property investment grew at its highest rate in eight months.

But the main positive note was an 8.5% pick-up in industrial input during March, the fastest since mid 2014 and boosted by the output of construction materials such as cement, steel and machinery.

A man repairs a water pipe at a residential building in Shanghai on April 13, 2016
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Property investment grew at its highest rate in eight months

Exports rebounded positively but reports last week showed that imports were down for the fourth consecutive month, amid weakening demand in the 1.4 billion-strong domestic market.

This has been proved in 2019 by a number of firms, including Apple, which delivered a shock profit warning and blamed a lack of appetite among Chinese consumers for its newest models, and Jaguar Land Rover which announced job cuts largely because Chinese customers are buying fewer cars.

China’s government has been trying to boost growth with tax cuts and infrastructure projects.

In January, China’s central bank also relaxed the rules on how much capital the country’s lenders must hold in cash reserves, the fifth time in a year that the People’s Bank of China (PBoC) had made such a move.

The OECD has warned China that this continue stimulus could make it difficult to control future debt and Mao Shengyong, spokesman at the National Bureau of Statistics, said the economy was still under pressure, despite the government support.

An 8.5% pick-up in industrial input during March was the fastest since mid 2014 and boosted by the output of construction materials such as cement, steel and machinery.


Jianwei Xu, senior economist, Greater China, at Natixis in Hong Kong, said it was too early to say China had recovered from the slowdown seen in previous years.

He said: “We need more evidence to call a full-fledged recovery.

“Our view for the economy is still cautious.

“We think [the stronger-than-expected data] is somewhat linked to the stimulus, but we can’t attribute it all to it.”

Nie Wen, an economist at Hwabao Trust, warned that the growth in industrial output was not “sustainable”.

The reaction in Europe was muted, with TF Global markets chief market analyst Naeem Aslam saying markets had “decided not to celebrate the strong economic data”.

He added: The concern is that the People’s Bank of China may change its stance towards its monetary policy – we may not see that much support from the PBOC.

“Let’s not forget, improving economic conditions over in China means better economic health of the global economy.”

The GDP figure comes as China and the US appear to be closing in on a trade deal that would help end the impasse which has worried world markets for months.

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