April 20, 2019
Anna Wood
The Chinese government announced on Wednesday that its GDP grew by 6.4% compared with the same period last year in the first three months. It was higher than Reuters' estimate of 6.3%. China's first-quarter performance stimulated some investment banks to increase their growth expectations. China has also officially been aiming at its target growth rate from 6.0% to 6.5% this year.
There are three banks, Citi Barclays, ING that have increased their economic growth in China in 2019; Barclays has raised from the previous forecast of 6.2% to 6.5%; Citi has raised from 6.2% to 6.6%; ING has raised from 6.3% to 6.5%. They believe the change in the real estate market, the punitive tariffs on trade wars, and 5G telecom production will help to continue thriving for the rest of the year.
China implemented stimulus measures for the world's second largest economy to reduce the loss of Sino-US trade wars. In the fourth quarter of 2018, it increased by 6.4% and the first quarter of 2018 increased by 6.8%, both compared with the same period of the previous year. For this result, there is a general consensus. The US trade war has successfully slowed China's economic growth.
Some analysts are explaining this status through other indicators. For example, Christopher Balding, an economist at Fulbright University Vietnam, says he has been studying business electricity use, although the official reports economic growth, but electricity consumption has being reduced.
The other three banks retain the growth as expected. JP Morgan believes that economic growth is driven by stimulus measures, so it will grow steadily in the second and third quarters, but it will weaken the growth momentum at the end of the year. Their annual forecast is maintained at 6/4%. Standard Chartered also kept 6.4%, and warned not to be too optimistic about China's prospects. Taimur Baig, chief economist at DBS Bank in Singapore, believes that China is in a “structural slowdown” and not over-excited. However, the data provided by various industries also give China's economic performance affirmation and they believe that there is a certain degree of stability.
Economists at the Spanish bank group BBVA say that they believe that the fundamentals of the Chinese economy are not as solid as the headline data shows, for the trade war may still have a negative impact, adding that the Chinese economy still relies on stimulus measures.
Photo :Webshot.