China's economy grows 6.9% in first quarter of 2017

Cornelia Mascio
Aprile 21, 2017

"The question we need to ask is whether this investment-led model is sustainable as the authorities have trouble taming credit". "The strong growth and better external demand has provided room for a faster pace of countercyclical monetary policy tightening".

The world's second-largest economy, China has started 2017 with its strongest quarterly performance in 18 months.

Spending by the central and local governments rose 21 percent from a year earlier.

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.

"Main indicators were better than expected.which laid a good foundation for achieving the full-year growth goals", statistics spokesman Mao Shengyong said at a news conference.

China is seeking to maintain stability in the property market this year after the roller coaster ride of 2016, with measures to prevent surges in metropolises and the growing inventories in small cities.

The latest round of restrictions came after more than two years of policy easing, starting with relaxation of purchase restrictions in 2014 and fueled by the pro-growth policies, including interest rate cuts.

Robust investment and new construction starts in the first quarter defied a slowing trend in sales measured by floor area as more government curbs take effect.

CHINA'S tightened regulations on the property market to rein in skyrocketing home prices began to pay off as home prices in major cities continued to stabilize.

The average new home prices rose slower year on year in all 15 first-tier and large second-tier cities.

China's total social financing, the government measure that encompasses total debt including bank loans as well as nonbank and other lending, rose by more than 11% a year ago.

However, the NBS said in a note accompanying the data that Beijing's daily new home transaction volumes fell in March after the tougher property curbs were introduced but did not provide a number.

There were also positive signs on the consumer front. Industrial output had also seen an increase from 6.3 percent to 7.6 percent compared to past year.

Retail sales increased 10.9 per cent from a year earlier in March, compared with a Bloomberg forecast of 9.7 per cent. The Organisation for Economic Co-operation and Development (OECD) says China's total private and public debt has exceeded250 percent of GDP, up from 150 percent before the global financial crisis.

The service sector rose 7.7 per cent year on year in the first quarter, outpacing a 3-per cent increase in agriculture and 6.4 per cent in the secondary industry.

"I would caution against becoming too concerned, though, especially ahead of the leadership change later in the year", he said.

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