China’s economy beat the government target and grew by 6.9 per cent in the first quarter this year mainly due to a surge in infrastructure investment and exports, showing signs of a steady development in the world’s second largest economy.
The growth was well above the full-year target of 6.5 per cent, and the 6.8 per cent increase registered in the fourth quarter of 2016, China’s National Bureau of Statistics said.
The GDP reached 18.07 trillion yuan ($2.63 trillion) in the first quarter.
The NBS statement said, “the national economy maintained the momentum of steady and sound development from the second half of last year, getting off to a good start in 2017 and laying a solid foundation for accomplishing the whole-year growth target”.
The official data also suggested a pick-up in domestic consumption as February retail sales jumped 10.9 per cent from the previous year.
China is trying to boost domestic consumption to shift focus of its export reliant economy, which is also driven by massive state investments in improving the infrastructure.
Also, China’s exports, which were on a declining trend in recent years, showed increase in Q1 in Yuan terms.
China’s exports in yuan-denominated terms rose 14.8 per cent year-on-year in the first quarter, while imports increased 31.1 per cent, customs data released on April 13 said.
Foreign trade volume reached 6.2 trillion yuan (about $902 billion) in the first quarter, up 21.8 per cent year on year.
As per the data released today by the NBS, China’s fixed-asset investment (FAI) grew 9.2 per cent year-on-year in the first three months of 2017, quickening from the 8.9 per cent growth registered in the first two months.
The FAI includes capital spent on infrastructure, property, machinery and other physical assets.
Private sector FAI, which accounts for more than 60 percent of the total FAI, grew 7.7 per cent in the first quarter, accelerating from the 6. 7 per cent registered in the first two months, according to the NBS.
FAI by state-owned enterprises climbed 13.6 per cent year on year during the period, and infrastructure investment expanded 23.5 per cent in the first quarter.
China’s value-added industrial output, an important economic indicator, expanded 6.8 per cent year on year in the first quarter, compared with the 6.3 per cent increase for January to February, the NBS data said.
The 6.8 per cent growth rose from the 5.8 per cent increase in the same period of 2016. It was also higher than the 6 per cent annual gain seen in 2016, NBS said.
In March, industrial production expanded 7.6 per cent year on year, NBS data showed.
Spending on infrastructure, spiralling property market and increase in public debt specially the bad loans remained a key concern for Chinese leadership as it grappled to halt the slowdown of the economy which last year slid to 6.9 per cent.
The government has lowered this year’s growth target to 6.5 per cent.
On the debt front, China’s total and private debt is reported to be worth more than 250 per cent of GDP.
In February this year, state-run Xinhua news agency has quoted China Banking Association as saying that the country’s bad loans totalled to a whopping $220 billion last year.
Bad loans by commercial banks totalled 1.5 trillion yuan ($220 billion) at the end of 2016.
The biggest borrower is urban infrastructure projects, followed by the medical sector, it said.
Though Chinese government has been maintaining that it will not resort to heavy stimulus package to halt slowdown of its economy, China reported to have finalised $6. 54 trillion FAI plans for this year.
“Instead, China will focus on supply-side reform for a modest expansion of aggregate demand,” Li Pumin, secretary general of the National Development and Reform Commission told media here recently when answering a question on whether China would roll out a major stimulus plan.
“Stimulus plans are used to prop up weak demand with government investment under special circumstances,” he said but at the same defended heavy fixed-asset investments (FAI) saying that they are different.
Last month, a report said plans by 23 provincial-level regions had announced FAI volume totalling some 45 trillion yuan for 2017, stoking concern of a gigantic stimulus plan.
Li said FAI volume is the aggregate rather than newly-added investment and includes investment from the public and private sector.