China’s economy continued to accelerate in the first quarter of 2017, with GDP clocking up a better-than-expected 6.9 per cent rise from a year ago, boosted by a pick-up in retail sales and robust factory output.
Also underpinning growth is government infrastructure spending and an ongoing boom in the housing market, which has caused some concerns.
"Generally speaking, the national economy has continued with stable and sound momentum in the first quarter as growth rebounded moderately and economic adjustment was steadily promoted," National Bureau of Statistics spokesperson Mao Shengyong told a news conference.
The GDP increase was the biggest in 18 months, outstripping the full-year target of 6.5 per cent and also ahead of the 6.8 per cent increase registered in the fourth quarter of 2016, the NBS said.
It’s also the first time in seven years that China’s economy has seen back-to-back quarterly acceleration.
Changing economy
The figures show how China’s economy is changing away from old industrial sectors to become more consumption focused. Consumption contributed to 77.2 per cent of the GDP increase in the first quarter. Last year, 64.6 per cent of growth came from consumption.
“China’s economic structure is improving and new momentum is gathering,” Mr Mao said.
The upbeat figures contradict largely gloomy prognoses for the Chinese economy, although it is expected to lose impetus later this year as the benefits of stimulus measures taper off and as local authorities try to cool house prices.
"The first quarter growth is mainly driven by reflation and very strong property sales and investment," Larry Hu, head of China economics at Macquarie Securities in Hong Kong, told Bloomberg. "This strong data would give more confidence to maintain a tightening stance."
China expanded 6.7 per cent year on year in 2016, the country’s weakest annual expansion in 26 years.
At the National People's Congress in March, the government trimmed this year's growth goal to about 6.5 per cent from a range of 6.5 to 7 per cent for 2016, a move expected to provide more wiggle room for reforms.
Property development
Retail sales increased 10.9 per cent from a year earlier in March, compared with a Bloomberg forecast of 9.7 per cent.
Industrial output rose 7.6 per cent last month from a year earlier, compared with an estimated 6.3 per cent rise.
Investment in property development rose 9.1 per cent in the first three months from a year earlier, compared with 8.9 per cent in the first two months and 6.9 per cent in 2016.
On the employment front, the jobless rate fell in March from February, while the level of unemployment in big cities was below 5 per cent at end of last month, the NBS said. China added 3.34 million new jobs in the first quarter.
Chinese GDP was 18.07 trillion yuan (€2.47 trillion) in the January-March period.
– (Additional reporting: Bloomberg)
