Official figures show that the Chinese economy grew by 6.9% in the first quarter of 2017.
China Economy Beats Expectations To Grow at 6.9% In First Quarter
The Chinese government reported that the country’s growth rate was slightly higher than expected when compared to the growth at the same time last year.
The commendable growth in the world’s second largest economy has been attributed to demand for new property and capital expenditure on infrastructure.
Only last month, China brought down this year’s growth target to 6.5% up from 6.7% in 2016.
The National Bureau of Statistics in China said in the second half of the last year the economy grew at a steady rate and got off to a good start in 2017. This set up a firm foundation for accomplishing the target for the year.
A rise in domestic consumption saw retail sales climb to 10.9% from last year.
China is one of the biggest drivers of the global economy and investors are always watching the performance of its economy. The year 2016 saw the slowest growth in 26 years.
According to Hidenobu Tokuda of the Tokyo based Mizuho Research Institute, China needs to slow its long term growth rate even though it is still very uncertain how this would happen.
Brian Jackson of IHS Global Insight posited that the most likely sectors to slow would be the property sector and the industrial output sector.
Meanwhile, analysts argue that it is essential to remain skeptical of the GDP data coming from the Chinese government. However, they agree that the latest figures suggest a stabilizing of the economy.
There is also a possibility that the government is using the same old tricks to propel economic growth
As the Chinese government transited to a new open and modern economy, it pledged to move away from incurring more debt, rapid growth of the property market and capital spending on infrastructure.
However, the last data shows these three factors are primarily responsible for fueling the economy, an indication that China is still reliant on the old model that was largely dependent on the state.
The level of debt in China is especially worrisome with total debt amounting to over 250% of the GDP and it will likely continue to grow.
Analysts do not agree over how well China will be able to manage its debt. The government has however made it clear that the status quo is not favorable and needs to be sorted out.