China Q1 GDP Growth Beats Estimates


The Chinese economy advanced 6.4 percent year-on-year in the March quarter of 2019, the same pace as in the previous quarter but slightly above market expectations of a 6.3 percent expansion. Industrial output growth accelerated markedly and consumer demand strengthened amid government's pro-growth policies, which helped stabilize sentiments rattled by trade dispute with the US.

The latest GDP reading remained at its lowest since the Global Financial Crisis, with financial risks mounting from alarming off-balance-sheet borrowings by local governments. The value added of the tertiary industry, which accounted for 57.3 percent of the GDP, was up by 7 percent, expanding by 0.6 percentage points compared with Q1 2018; the industrial sector grew by 6.1 percent and the agricultural by 2.7 percent. Consumption continued to be the mainstay in driving up demand, contributing 65.1 percent to Q1 economic growth.

Industrial output rose by 8.5 percent year-on-year in March, easily beating market consensus of a 5.9 percent increase and accelerating from a 5.3 percent rise in the previous period. It was the biggest gain in industrial output since July 2014, when the reading showed a 9 percent growth. Output expanded at a stronger rate for all components: manufacturing (9 percent vs 5.6 percent in January-February), utilities (7.7 percent vs 6.8 percent), and mining (4.6 percent vs 0.3 percent). By industry, production rose faster for: transport equipment (13.6 percent vs 7.9 percent); machinery (15.2 percent vs 8 percent); non-metal minerals (15.4 percent vs 8.8 percent); textiles (9 percent vs 0.2 percent); general equipment (14.1 percent vs 4.4 percent); communication (10.2 percent vs 6 percent); ferrous metals (8.5 percent vs 7.5 percent); chemicals (7.1 percent vs 4.3 percent); and power equipment (7.2 percent vs 6.1 percent). Considering the first three months of 2019, industrial production expanded 6.5 percent compared to the same period a year earlier.

Retail sales increased by 8.7 percent year-on-year in March, faster than a 8.2 percent gain in the prior period and above market expectations of a 8.4 percent gain. It was the largest rise in retail trade since September last year, as sales advanced further for garments (6.6 percent vs 1.8 percent in January-February); cosmetics (14.4 percent vs 8.9 percent); personal care (16.6 percent vs 15.9 percent); home appliances (15.2 percent vs 3.3 percent); furniture (12.8 percent vs 0.7 percent); oil & oil products (7.1 percent vs 2.5 percent); telecoms (13.8 percent vs 8.2 percent); and building materials (10.8 percent vs 6.6 percent). In contrast, sales fell for both jewelry (-1.2 percent vs 4.4 percent), and office supplies (-4 percent vs 8.8 percent). Considering the first quarter of 2019, retail sales grew by 8.3 percent from the corresponding period a year earlier.

From January to March, fixed-asset investment advanced 6.3 percent from a year earlier, stronger than a 6.1 percent growth in the preceding quarter and in line with market consensus. Public investment rose further (6.7 percent vs 5.5 percent in January-February) while private investment growth eased (6.4 percent vs 7.5 percent). By sector, fixed-asset investment rebounded for both utilities (0.7 percent vs -1.4 percent) and water conservancy, environment and public facilities management (1.0 percent vs -0.4 percent). Meanwhile, fixed-asset investment growth slowed for: mining (14.8 percent vs 41.4 percent); transport, storage and postal industry (6.5 percent vs 7.5 percent); agriculture, forestry, animal husbandry; fishery (2.8 percent vs 4.0 percent), and manufacturing (4.6 percent vs 5.9 percent).

Figures released earlier showed China's exports grew 0.9 percent in the first quarter, while imports shrank 4.4 percent.

On a quarter-on-quarter basis, the economy  expanded 1.4 percent in the first quarter, compared to a 1.5 percent growth in the previous period and matching  market estimates. This was the weakest pace of quarterly expansion  in three years.


China Q1 GDP Growth Beats Estimates


Statistics China l Rida Husna | rida@tradingeconomics.com
4/17/2019 9:59:59 AM