March figures to fall short of government target
Print Edition
CHINA’S economic data for March may remain soft and land the first-quarter growth at a level lower than the government’s annual target of around 7 percent, analysts said before the release of the data.
The recent policy easing efforts are likely to help economic growth rebound in the second quarter, but the effects will be mitigated by the still weak property sector, they said.
“We expect the upcoming March and first-quarter data to show economic activity still pallid,” said Wang Tao, an economist at UBS. “They are weighed down largely by the ongoing property downturn and weak industrial investment. As a result, the gross domestic product growth will likely soften to 6.9 percent in the first three months,” Wang said.
The National Bureau of Statistics will report the first-quarter growth rate next Wednesday after the release of consumer and producer prices on Friday.
Lian Ping, chief economist at the Bank of Communications, also predicted the growth rate in the January-March period will land at 6.9 percent, lower than the government target of around 7 percent for this year.
“China will continue to face deflationary pressure, while March data of industrial production, fixed-asset investment and retail sales may stay weak,” Lian said, noting imports will likely plunge again due to sluggish demand.
Indicators remain weak
The Consumer Price Index, the main gauge of inflation, will likely rise 1.3 percent in March, down from the pace of 1.4 percent a month earlier, Lian said, while other data may largely stay at the same level as that in February, except that imports may slide further by 20.5 percent, compared with February’s fall of 15 percent.
China’s gross domestic product expanded 7.4 percent from a year earlier in 2014, the slowest in more than 24 years. The performance at the start of this year continued to falter, with key indicators staying weak in the first two months.
China’s central bank announced a surprising interest rate cut on the last day of February. The cut was the second time in three months and followed a reduction of reserve requirement ratio in early February.
Also, the government delivered its most significant property easing measures in recent years last month, cutting both mortgage down payment requirements and the property transaction tax burden.
“The latest measures and more easing to come can help improve property sales and slow property construction’s deterioration,” said Wang with UBS. “But we do not see them reversing the down trend or reigniting another property bubble as fundamentals don’t change for property investors.”
Wang said further measures, including acceleration of infrastructure projects and more reforms such as services deregulation, are likely to be rolled out in the next few weeks or months, with the economy starting on a very weak note.
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