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Fast Comment ChinaGDP growth stays remarkably stable

  1. Official GDP growth within a narrow range
  2. China had a strong start to the year
  3. We see growth slowing gradually
Official GDP growth within a narrow range
GDP grew by 6.8 percent y-o-y in Q1 as expected, unchanged from Q4. GDP growth has now been within a narrow interval from 6.7 to 6.9 percent y-o-y for 2½ years. Meanwhile, the two important growth drivers – property construction activity and industrial sector production and investments – have experienced huge policy-driven swings, casting some doubt on the validity of the stable overall GDP growth.
China had a strong start to the year
The monthly figures showed stronger-than-expected retail sales growth in March, as growth increased from 9.4 percent y-o-y in January-February to 10.1 percent March. Thus, the consumption growth story appears to be intact, with online retail sales being particularly strong. For Q1 as a whole, the other monthly activity indicators also look fairly strong. However, industrial production growth slowed disappointingly in March, and fixed asset investments growth slowed too. Thus, there are no signs yet of the industrial sector enjoying a boost from the decision during the winter to scrap the anti-pollution measures introduced last autumn to improve air quality.
We see growth slowing gradually
There are reasons to expect a gradual slowdown ahead, in our view, even if a full-blown trade war with the US is avoided. As the authorities try to rein in financial risks and dampen shadow banking activities, credit growth is slowing, thereby hurting overall economic growth. Furthermore, measures to dampen the wobbly property market, especially prices, have not yet been rolled back, while fiscal policy is being tightened rather than loosened.



Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

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