Growth slows but ‘remains stable’
Print Edition
CHINA’S economic growth slowed to 7 percent in the first quarter, down from the pace of 7.3 percent in last year’s final quarter, the National Bureau of Statistics said yesterday. However, growth is still within a stable range, bureau spokesman Sheng Laiyun added.
The country’s gross domestic product was 14.06 trillion yuan (US$2.26 trillion) in the first three months, the slowest quarterly expansion since 2009, although it was better than had been expected.
Sheng said economic growth was remaining stable in the face of weak global demand and mounting downward pressure in the domestic market.
“Despite slower growth, China’s employment, inflation and people’s confidence are stabilizing along with accelerating industrial reforms and restructuring,” Sheng said. “We see positive factors accumulating and in the next phase we will try to carry out various targets and missions set by the central government in rebalancing the economy.”
This year’s official annual growth target has been set at around 7 percent, down from the previous goal of 7.5 percent.
The first quarter’s expansion was led by the service sector, which gained 7.9 percent to 7.26 trillion yuan. The manufacturing sector added 6.4 percent to 6.03 trillion yuan, while agriculture rose 3.2 percent to 777 billion yuan.
Industrial production increased 6.4 percent. Factories reported an expansion of 5.6 percent in March alone, down from the 6.8 percent pace in the first two months.
Fixed-asset investment grew 13.5 percent to 7.75 trillion yuan during the period, compared with the increase of 13.9 percent in the first two months. Capital flowing into property rose 8.5 percent, down from last year’s gain of 10.9 percent and indicating continued correction in the sector.
Retail sales accelerated 10.6 percent to 7 trillion yuan in the first quarter. Online spending surged 41.3 percent to 760 billion yuan. In March alone, retail sales rose 10.2 percent.
Wang Tao, an economist with UBS, said growth cooled in all headline components, reflecting persistent downward pressure on the economy.
“Growth of industrial production slowed to a six-year low, indicating weakness in China’s traditional sectors, which was partly offset by stronger infrastructure investment and resilient service sector activities,” Wang said.
Andrew Colquhoun, head of Asia-Pacific Sovereigns at Fitch Ratings, said slower growth should not be viewed as bad news if it means the economy is adjusting to a more sustainable path.
“But the adjustment needs support from consumption while the economy adapts to slower investment,” he said.
Jing Ulrich, managing director and vice-chairwoman of Asia Pacific at JPMorgan, said China is on the right path of optimizing its economic structure.
“It is worthy of notice that people’s incomes have grown faster than the economy, and e-commerce has seen huge expansion,” Ulrich said.
The statistics bureau said per capita disposable income grew 9.4 percent to 6,084 yuan in the first quarter.
Zhu Haibin, chief economist for China at JPMorgan, said more easing might be on the cards.
“We expect the impact of policy adjustment, together with the growth pickup in advanced economies and global oil price decline, will support China’s growth momentum in the second and third quarter,” Zhu said.
China cut interest rates and the reserve requirement ratio this year and relaxed property sales restrictions.
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