China’s economic growth beats forecasts

Workers in a factory in ChinaImage copyright Getty Images

China’s economy grew slightly faster than expected in the three months to March, official figures released Wednesday showed.

The economy expanded at 6.4% in the first quarter from a year earlier, ahead of a Reuters forecast of 6.3%.

Beijing has taken steps to boost its slowing economy, including tax cuts, while trying not to inflate debt.

The world’s second-largest economy also faces softer global demand for its products and a trade war with the US.

China’s rate of growth is closely-watched for the potential knock-on effect on the global economy.

The latest growth figures were in line with the 6.4% rate posted in the last three months of 2018.

The result follow a sharp pick-up in factory output, with industrial production jumping to 8.5% in March.

Other data out Wednesday also showed improvement. Retail sales for March rose 8.7% on a year earlier, and fixed asset investment expanded to 6.3% from a year earlier.

While China watchers advise caution with Beijing’s official GDP numbers, the data is seen as a useful indicator of the country’s growth trajectory.

“There is no denying that China’s economy ended the first quarter on a stronger note,” Capital Economics China economist Julian Evans-Pritchard said.

Beijing is forecasting slower growth of between 6% and 6.5% this year, down from a target of around 6.5% in 2018.

China’s government has been pushing to shift away from export-led growth to depend more on domestic consumption.

Policymakers in China have stepped up efforts in recent months to support the economy including cutting some taxes, speeding up construction projects and cutting the level of reserves banks are required to hold.

Mr Evans-Pritchard said there are still “some reasons for caution” in the short-term.

“But with credit growth now accelerating and sentiment improving, China’s economy will bottom out before long if it hasn’t already.”

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