China's economy grows at 6.9 percent


China's economy grows at 6.9 percent

Even as top officials vowed to crack down on debt risks, China's total social financing, a broad measure of credit and liquidity in the economy, reached a record 6.93 trillion yuan ($1 trillion) in the first quarter - roughly equivalent to the size of Mexico's 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.

Retail sales grew 10.9% in March from a year earlier, accelerating from a 9.5% increase in February.

During the first quarter, investment in fixed assets such as factories expanded 9.2% from a year earlier, while retail sales grew 10%.

Haikou, the capital of Hainan province-an island off the southern tip of mainland China that is known for its white beaches-led the nation with the highest month-over-month gain of 2.6% in March.

Once again, China's policymakers leaned on infrastructure and real estate investment to drive expansion in the first quarter.

China imported the most iron ore on record in the first quarter, but iron ore and steel futures prices are nosediving on fears that its steel production is outweighing demand.

While still cautious about future prospects, economists believe that the resilience reflected in the first-quarter figure will prompt stricter scrutiny in the financial sector, a move pushed by Chinese authorities to fend off systemic risks.

While posting better-than-expected growth for the first quarter, the Chinese statistics bureau said Monday that crude oil production was down from previous year.

However, China's economy still relies heavily on massive state investments and projects, despite Beijing's efforts to reduce the dependence of the state when it comes to the country's growth.

Property sales measured by floor area grew 19.5% in January-March from the same period a year earlier, but that was down sharply from the 25.1% growth in January and February.

While we should always remain sceptical of the Chinese government's GDP data, these figures suggest that growth is stabilising.

Monday's data also showed China's industrial output growth rose to 7.6 per cent year-on-year in March, beating a Bloomberg estimate of 6.3.

However IG market analyst Chris Weston said there was the prospect that positive growth had peaked in China, with the growth rate gradually moving lower.

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 a year ago slid to 6.9 per cent.

After recording the slowest annual growth in 26 years of 6.7% in 2016, China's economy has now stabilized and appears to be regaining some momentum.