China just released its latest batch of economic data which showed that economic growth missed analyst expectations.
“The fall in 1Q13 GDP growth was mainly driven by a slowdown in consumption growth due to the new leaders’ crackdown on govt luxury spending, a pause in inventory restocking and slowdown in property FAI growth due to concerns on property tightening,” said Bank of America’s Ting Lu in a note to clients.
There has already been a jump in lending in March. And some economists have warned that this could be the end of easy credit in China as this surge in lending poses risks to the financial system.
But China has set a GDP target of 7.5 per cent for the year. And some economists like Lu expect monetary policy to stay neutral (on account of cooling inflation) and GDP growth to climb back to 8 per cent in the second quarter, if the bird flu is kept in check.