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Q1 GDP rises 6.4 percent

By Huang Ge and Chu Daye Source:Global Times Published: 2019/4/18 1:03:39

Consumption to continue driving growth: analyst


Aerial photo taken shows a container wharf of Yangshan Port in Shanghai. China's first-quarter (Q1) GDP beat market expectations to rise by 6.4 percent. Photo: Xinhua





China's first-quarter (Q1) GDP beat market expectations to rise by 6.4 percent, as experts said the country's economy, which features high-quality growth, is stabilizing and is resilient to tackle uncertainties in the world amid ongoing trade tensions with the US.

The government will rely on fiscal measures to further boost domestic demand this year and a greater focus will be placed on driving sectors like high technology, experts noted.

China's economy rose by 6.4 percent year-on-year in the first three months to 21.3 trillion yuan ($3.18 trillion), official data showed Wednesday. The growth rate was flat from the last quarter of 2018 and reaching a decade low. 

But the first-quarter growth rate, the slowest since 2009, still beat market expectations of 6.2-6.3 percent. If the GDP had grown by 6.3 percent, it would have been the slowest pace for the economy in 27 years.

China's economy enjoyed a stable performance starting the year, with growing positive factors and stronger market confidence, Mao Shengyong, spokesperson of the National Bureau of Statistics (NBS), told a press conference.

However, the economic downward pressure still persists due to a slowing world economy, increasing global uncertainty and domestic structural issues, Mao said, noting that "the task of reform and development is arduous."

Xu Hongcai, a Beijing-based economist, noted that China's GDP growth will slowly decline given the deeper transformation of the economy. But the quality of growth will improve.

"The better-than-expected performance of the first quarter is a combination of short-term factors such a sudden surge in net exports and long-term factors, including continued policy dividends," Xu said.

Xu noted that the fiscal and monetary policies aimed at driving consumption and investment are affecting the economy. The effects will last longer than the performance in net exports, which Xu considers a short-term phenomenon.

The Chinese government responded to the slowdown in 2018 with efforts such as limiting the extent of financial regulatory tightening, injecting liquidity through cuts in the reserve requirement ratio and reducing personal income taxes. 

The Chinese government vowed to cut taxes and fees by 2 trillion yuan in 2019 to boost consumption and shore up the manufacturing sector. In 2016, it was just 500 billion yuan.

The approaching trade deal between Beijing and Washington would also add to business confidence and ease some concerns over the slowdown in global economic development, Liu Xuezhi, an economist at Bank of Communications, said.

As the government steps up efforts to stabilize development, the economy may further consolidate in the second quarter and can meet this year's GDP growth target, Liu said, noting that growth will be maintained at around 6.3 percent this year, thanks to incentives, including tax and fee cuts.

The IMF on April 9 revised up its 2019 growth projection for China to 6.3 percent - up 0.1 percentage point from its January forecast. 

China has set a GDP growth target of 6 to 6.5 percent this year as the country aims to seek higher-quality growth amid mounting uncertainties in the global economic landscape, according to the annual Government Work Report delivered by Premier Li Keqiang at the two sessions.

Strong support

The resilience of China's economy is actually much stronger than expected, supported by increasing domestic demand in consumption and investment as well as industrial production, experts said.

Consumption, the major engine of growth, contributed 65.1 percent to GDP growth in the first three months, the NBS said.

Retail sales, industrial output and fixed-asset investments rose by 8.3 percent, 6.5 percent and 6.3 percent, respectively, on a yearly basis. Specifically, high-tech manufacturing investments rose fast during the period, up by 11.4 percent.

"Consumption will continue to further drive economic growth in some emerging industries, such as culture, sports, tourism, healthcare and education," Liu said.

As to the fast growth in investment in high-tech, Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, attributed the rise to the fact that domestic companies feel pressure from China-US trade tensions in terms of intellectual property rights protection.

"The increased investment in high-tech shows that Chinese firms have been making changes, like increasing investment in research and development (R&D), to improve their competitiveness," he told the Global Times on Wednesday.

As the government prepares to advance emerging industries such as cloud computing, intelligent equipment, robotics and biological medicine, investment in high-tech will continue to rise, which will inject vitality to China's economic growth, Dong said.



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