Chinese growth slows but shows signs of stabilizing

© Nicky Loh
Growth of the world’s second-biggest economy slowed to an annual rate of 6.7 percent in the first quarter of 2016, China's National Bureau of Statistics reported Friday.

It is the slowest quarterly growth for China since the financial crisis in 2009, but it is in line with forecasts and the government’s growth target of 6.5-7 percent for this year.

Meanwhile, stronger than expected trade data, increased foreign exchange reserves, improving property and fixed-asset investment figures suggest Beijing's stimulus measures are paying off.

In March, Chinese exports posted their first growth in nine months, rising 11.5 percent in dollar terms year-on-year. Foreign exchange reserves also increased for the first time in five months, partly due to a large trade surplus of $29.9 billion.

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Fixed-asset investment grew 10.7 percent year-on-year to March, well ahead of expectations and the strongest since August. Property investment was up 6.2 percent, which is its fastest pace in a year.

“This fresh batch of macroeconomic data paints a picture of an economy that has lost some growth momentum but lives to fight another day,” said Eswar Prasad, economics professor at Cornell University and former China head of the IMF.

The International Monetary Fund recently revised its full-year forecast for China up to 6.5 percent from the previously projected 6.3 percent. IMF also said China’s growth has the most significant impact on global equity prices.

But while some experts see the latest figures from China as a sign of stabilization, others question the improvements.

“The uptick is not sustainable in the longer-term, but it could last one or two quarters,” Commerzbank economist Zhou Hao told the Wall Street Journal.

“Recent data appears to repudiate the excessively pessimistic views about China’s economy that were rampant in financial markets earlier this year, although there is still plenty of ammunition for pessimists to maintain their negative outlook,” said Eswar Prasad.