China Q1 Growth Tops Expectations

By Glenn Dyer | More Articles by Glenn Dyer

China’s economic growth was a bit better than expected in the three months to March, with a stronger than forecast jump in production reported.

The economy grew at an annual rate of 6.4% against forecasts of 6.3%. That was unchanged from the December quarter, but down sharply from the 6.8% annual rate in the first three months of 2018.

The figures, in fact, suggest that tariff war with Washington is having little impact and that, Beijing’s efforts to reverse a slowdown are starting to find traction.

On a quarterly basis, GDP in the first quarter grew 1.4%, as expected, but dipped from 1.5% in October-December. The government is aiming for economic growth of 6.0%-6.5% this year, so the 6.4% reading is on ‘budget’.

Consumer spending, factory activity, and investment all improved in March from the previous month, the National Bureau of Statistics reported on Wednesday. The economy showed “growing positive factors,” the bureau statement said in a statement.

China’s industrial production grew remarkably strongly in March – increasing by 8.5% year on year, compared with just 5.3% year on year (YoY) in January and February.

That was the largest increase in industrial output since July 2014.

Crude steel production surged – up nearly 10% for the quarter and 10% from March last year.

China’s January-March crude steel output rose 9.9% from the first quarter of 2018 to a record of 231.07 million tonnes.

That was after China’s March crude steel output jumped 10% from a year ago to 80.33 million tonnes – stats bureau.

There was strong growth in construction-related sectors, with cement and crude steel output rising by 22.2% YoY and 10.0% YoY respectively.

Similarly, output of consumer electronic products rose by 10.2% YoY.

In contrast, electricity output rose more moderately – up by 5.4% YoY – while motor vehicle output fell by 2.6% YoY.

Car sales are weak because of tighter credit availability. Car sales have now fallen for the last nine months in a row.

Retail sales rose 8.7% in March, beating market forecasts of 8.4% growth and the previous 8.2%.

Sales were led by sharply higher demand for home appliances, furniture, and building materials, pointing to strength in China’s residential property market.

New home prices grew slightly faster in March after slowing in the previous month, data on Tuesday showed, boosted by price gains in smaller cities.

Food prices rose because of higher pork prices in particular.

Fixed-asset investment grew 6.3% in January-to-March from a year earlier, in line with estimates and picking up from the previous period.

Real estate investment rose 11.8% against 11.6% over January and February.

Previously reported were stronger than forecast exports with a growth of 14.2% in March, but imports fell faster than expected – down 7.6%.

Bank lending hit record levels in March and the first three months of the year

Over the first quarter, exports were up 1.4%, while imports fell 4.8% in a sign of weak Chinese domestic demand in January and February.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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