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The EIU comment on China's first-quarter GDP figures

The EIU comment on China's first-quarter GDP figures

Commenting on China’s first-quarter GDP figures, Tom Rafferty, Asia Editor at The Economist Intelligence Unit (EIU) in Beijing, said: “China's economy is slowing at a rate with which the government is probably uncomfortable and more concerted policy stimulus is now likely. Although 7% growth in the first quarter was in line with the full-year target of "about 7%" expansion, March data on industrial production, fixed-asset investment and retail sales pointed to weak momentum behind the economy as it heads into the second quarter. We have pencilled in a further benchmark interest rate cut this year and expect fiscal policy to shift to a more expansionary stance. Domestic infrastructure projects tied to the government's "one belt, one road" strategy are likely to be a particular focus.

This ought to help to soften the pace of the slowdown in investment growth, the main driver of the economy, but not abate it entirely. Headwinds from the property sector are still strong, and recent steps to loosen mortgage lending and house-purchasing restrictions are yet to improve buyer or developer sentiment. Forward-looking indicators for property construction point to a further investment slowdown in the coming months.

First quarter economic growth came in slightly weaker than we had expected. We will be reviewing our forecast for 7% real GDP growth in the year as a whole, with a view to revising it downwards.”


Updated : 2021-09-28 07:55 GMT+08:00