China’s economy grew by 6.7% year-on-year in the first quarter of 2016, a figure that was bang in line with market expectations.
The reading, down slightly on the 6.8% pace of Q4 2015, was the slowest year-on-year growth recorded since the March quarter of 2009.
Despite the slight deceleration in growth, the NBS suggested that the economy had a “good start” to the year.
“The overall performance of national economy continued to be stable and move in a positive direction, with structural adjustment deepened, new impetus accumulated and positive changes showed on major indicators,” said the NBS. “The national economy enjoyed a good start”.
According to the NBS, the preliminary estimate for GDP was 15,852.6 billion yuan for the quarter, or around US$2.44 trillion.
“Calculated at 2015 prices, the GDP in the first quarter increased by 985.1 billion yuan year-on-year, 22.2 billion yuan more than that in the same period of last year,” said the NBS.
Growth across China’s tertiary industries – predominantly services – increased by 7.6% to 9,021.4 billion yuan, outpacing growth in the nation’s secondary (5,951.0 billion yuan) and primary industries (880.3 billion yuan) of 5.8% and 2.9% respectively.
The percentage figures, along with the value of each sectors contribution to overall GDP, suggests the economy’s transition towards growth powered by consumption and services continued to find traction in the early parts of the year.
Alongside the GDP report, the NBS also released industrial output, retail sales and urban fixed asset investment figures for March, with all of the data smashing expectations.
Industrial output increased by 6.8% from a year earlier, a sharp acceleration on the 5.4% pace of February and well ahead of expectations for an increase of 5.9%. It was also the fastest annual growth recorded since June last year.
Retail sales grew by 10.5%, above the 10.2% level reported previously and above forecasts for an increase of 10.4%.
Urban fixed asset investment rose by 10.7% between January to March compared to the same period a year earlier, topping expectations for an increase of 10.3%. The figure marked the fastest annual expansion since August 2015.
As an unexpected bonus, the People’s Bank of China (PBOC) also released new bank lending figures for March alongside the NBS data, with that too topping expectations.
New lending rose by 1.37 trillion yuan, a figure well ahead of forecasts for an increase of 1.05 trillion yuan. From a year earlier the level of outstanding bank loans rose by 14.7%, topping expectations for an increase of 14.5%
Total social financing – the broadest measure of liquidity that captures lending from non-traditional sources – also accelerated, rising from 780.2 billion yuan in February to 2.34 trillion yuan in March.
M2, or broad money that includes cash in circulation and bank deposits, increased by 13.4% from March 2015, up on the 13.3% pace of February but below expectations for an acceleration to 13.5%.
Despite the series of data beats and in line GDP print, the market reaction to the data deluge has been muted, perhaps as a result of the news lessening the chance of more stimulus being delivered by Chinese policymakers.
It may also see the US Federal Reserve lift interest rates earlier than expected given concerns over the Chinese economy were cited as one reason to delay moving too quickly on rates in recent FOMC meetings.