China’s economic growth in Q1 beat expectation.
Instead of a widely expected slowdown, the country's economy expanded by 6.4% in the quarter, buoyed by robust growth—8.5% year-on-year in March—of industrial production improving consumer demand.
Mao Shengyong, spokesperson at China’s National Bureau of Statics said the country’s economy still faces pressure though government support is gradually showing its effect.
While Beijing has announced billions of dollars in additional tax cuts and infrastructure spending, banks in the country lent a record CNY 5.8 trillion (US$865 billion) in Q1.
Natixis’s senior economist Jianwei Xu also cautioned that China needs more evidence to confirm a full-fledged recovery.
While exports rebounded more than expected in March, that could be a result of the long Lunar New Year holidays in February.
Imports were also down for the fourth straight month, hinting that domestic demand still remains slow.
However, consumer confidence seemed to rise as retail sales were up 8.7% in March, beating the estimate of 8.4% and led by stronger demand for building materials, furniture, and home appliances.
The Chinese government targets a growth range of 6%-6.5%,
While the IMF in its April update raised its forecast for Chinese growth by 0.1 point to 6.3% this year, Euler Hermes believes China could hit the high end of the range.
Alexis Garatti, head of Macro and Thematic Research, Euler Hermes puts the estimate at 6.4% for 2019.
“In the meantime, economic growth in China is set to remain relatively resilient, thanks to a proactive stimulus package of CNY 4.15 trillion, 5% of GDP, he said. “As a result, we expect China to replace the US as the main source of global growth in 2019 and 2020.”