Investors have ranked China’s slowdown and the trade war as the biggest risks facing the faltering global economy. But analysts warn it is too early to call a sustainable turnaround, and further policy support is needed to maintain momentum in the world’s second-largest economy. Many had expected a recovery only in the second half of 2019.
Beijing has ramped up fiscal stimulus this year, announcing billions of dollars in additional tax cuts and infrastructure spending, while Chinese banks lent a record 5.8 trillion yuan ($865 billion) in the first quarter, more than the economy of Switzerland. “We need more evidence to call a full-fledged recovery. Our view for the economy is still cautious,” said Jianwei Xu, senior economist, Greater China at Natixis in Hong Kong. “We think it (the stronger-than-expected data) is somewhat linked to the stimulus, but we can’t attribute it all to it.”
Analysts had expected GDP growth to slow slightly to 6.3% in January-March from a year earlier. Share markets and most currencies in Asia rose in relief, as China’s slowdown has increasingly weighed on its trading partners from Japan to Germany. The yuan currency rose 0.4% to a 7-week high.
Government support is gradually having an effect, though the economy still faces pressure, Mao Shengyong, spokesman at the National Bureau of Statistics, cautioned on Wednesday.
Quarterly growth was supported by a sharp jump in industrial production, which surged 8.5% in March on-year, the fastest in over 4-1/2 years. That handily beat estimates of 5.9% and 5.3% in the first two months of the year. Output of building materials such as steel and cement, as well as machinery, showed strong gains. Prices of steel reinforcing bars used in construction hit 7-1/2 year highs this week on firm demand. REUTERS
News credit : Indiatimes