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China’s economy beats forecasts, clocks 6.8% growth in Q1

China’s sustained growth shows the economy has remained resilient even as Beijing kicked its war on pollution, and battled trade tensions with the US.

business Updated: Apr 17, 2018 18:06 IST
Agence France-Presse, Beijing
China growth,Chinese economy,China's economy
A construction site worker is seen behind China’s national flag in Beijing. Fears of a trade war with the US have also roiled markets in recent weeks, with Washington and Beijing exchanging warnings of tit-for-tat tariffs on a significant portion of their bilateral trade.(Reuters File Photo)

China’s economy grew at a forecast-beating 6.8% in the first quarter, official data showed Tuesday, overcoming Beijing’s battle on financial risk and pollution and trade tensions with the US.

The world’s number two economy exceeded the 6.7% growth forecast by analysts surveyed by AFP, and equalled the fourth quarter performance.

“The national economy maintained the momentum of steady and sound development,” said Xing Zhihong, a spokesman for the National Statistics Bureau.

“The economic performance continued to improve and the economy was off to a good start.”

China’s sustained growth shows the economy has remained resilient even as Beijing kicked its war on pollution into a high gear during the winter months by cutting production for many steel smelters, mills and factories.

Fears of a trade war with the US have also roiled markets in recent weeks, with Washington and Beijing exchanging warnings of tit-for-tat tariffs on a significant portion of their bilateral trade.

The tensions have yet to cause real harm to the economy, analysts say, but that may change in coming months when tariffs threatened by US President Donald Trump are expected to be implemented.

“Years of unfair trade have hammered American families and plundered American wealth,” Trump said Friday in his weekly address.

“It’s been absolutely terrible for our country,” he said, adding his administration was proposing tariffs to “save our industries for the future”.

“We have no other choice,” Trump said.

The threatened tariffs on a $150 billion worth of Chinese goods, and $50 billion of US goods, would dent economic growth on both sides of the Pacific, analysts say.

Debt fears

For the last decade, about 20% of China’s exports have been ferried to the US, according to Moody’s Investors Services, which forecasts a material macroeconomic impact if Trump makes good on his threats with the consequences vibrating beyond China’s end exporters and deep into the economy.

Along with exports, debt-fuelled investment has driven China’s economy over the last decade — but with fears growing over a possible credit crisis, officials in Beijing are stepping up their battle against debt and financial risk.

Output at China’s factories and workshops expanded 6.8% year-on-year for the first quarter, matching the expansion seen during the same period last year, but below the 6.9% forecast by Bloomberg News. Industrial production grew by 6% in March.

Last week, China’s central bank released data showing total financing grew at 10.5% in March, the slowest pace on record, according to China-focused economist Andrew Polk.

Analysts say the financial risk battle will take a toll on growth but China is counting on its 1.4 billion consumers to pick up the slack.

Economic data show China’s savers spending with retail sales growing 9.8% in the first quarter on-year, outpacing forecasts of 9.7% by Bloomberg News.

But the reading is down from 10% in the same period of last year.

First Published: Apr 17, 2018 09:41 IST