China's GDP data comes in right on target, as it's done for nearly three years

Chinese President Xi Jinping and Chinese Premier Li Keqiang. Picture: Lintao Zhang/Getty Images
  • China’s economy grew 6.8% in the March quarter compared to a year earlier, in line with market expectations.
  • GDP has either printed in line or exceeded market expectations by 0.1 percentage points every quarter since mid-2015.
  • China’s National Bureau of Statistics (NBS) described the result as a “good start” to 2018.

China’s latest GDP report card, somewhat predictably, has printed in line with market expectations.

According to China’s National Bureau of Statistics (NBS), the economy grew by 6.8% in the March quarter compared to a year earlier, in line with economist forecasts and unchanged from the December quarter.

The GDP figure has either printed in line or exceeded market expectations by 0.1 percentage points every quarter since mid-2015.

Quarterly GDP growth came in at 1.4% in seasonally adjusted terms, slightly below the median economist forecast for an increase of 1.5%.

The NBS described the result as a “good start” to 2018.

“The national economy maintained the momentum of steady and sound development,” it said. “The transformation and upgrading was pushed forward steadily, the economic performance continued to improve and the economy was off to a good start.”

The NBS said GDP for tertiary industries, largely reflecting the performance of the service sector, grew by 7.5% from a year earlier, outpacing growth of 6.3% for secondary industries and 3.2% for the primary sector.

Secondary industries largely reflect the performance of the industrial sector.

Despite the remarkably consistent growth performance seen in recent years — and in the chart above — the NBS cautioned that international uncertainties are “increasing”, adding that “the problems of unbalanced and inadequate development in China are acute and the tasks for reform and development are daunting”.

Alongside the GDP report, the NBS also released monthly industrial output, retail sales and urban fixed asset investment figures for March.

Unlike the GDP report, there were a few surprises.

Retail sales, after growing 9.7% in the 12 months to February, accelerated to 10.1% in the 12 months to March, breezing past market expectations for a smaller increase of 9.9%.

From a year earlier, retail sales grew by 9.8% over the March quarter to 9.03 trillion yuan.

Reflecting the growing shift towards e-commerce, the NBS said online retail sales soared by a jaw-dropping 35.4% in the 12 months to March, some 3.3 percentage points more than the year to March 2017.

Online sales of goods grew by 34.4%, outpaced by a 38.7% lift in services.

However, while overall retail sales beat forecasts, both industrial output and fixed asset investment undershot expectations.

Over the year, industrial output grew by 6%, down from 7.2% in the 12 months to February and forecasts for a smaller deceleration to 6.2%.

The NBS said mining output grew 0.9% over the year, far slower than manufacturing and utility output which expanded by 7.0% and 10.8% respectively.

Compared to the March quarter of 2017, total industrial output expanded by 6.8% over the year with government firms outperforming their publicly-listed and foreign-owned competitors.

The NBS said new-age manufacturers, in particular, put in a strong performance.

“New industries and new products grew rapidly,” the NBS said. “The value added of high-tech industry and equipment manufacturing industry grew by 11.9% and 8.8% year-on-year respectively.”

Like the performance from the industrial sector in March, investment in fixed assets across urban areas also fell short of expectations.

Compared to the first quarter of 2017, urban fixed asset investment grew 7.5%, below the 7.6% level expected and 7.9% annual growth pace seen in the first two months of the year.

Investment by government-controlled firms grew by 7.1% in the March quarter compared to a year earlier, slower than the 8.9% lift in private sector investment over the same period.

The deceleration in the headline rate came despite stronger investment in real estate which grew by 10.4% from a year earlier, some 0.5 percentage points faster than in the first two months of the year.

“Investment in residential buildings went up by 13.3%,” the NBS said.

There has been negligible reaction in financial markets to either the GDP report or trio of March indicators, continuing the trend seen in recent years.

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