Chinese growth is slowing less than expected

Analysts forecast a slight slowdown in Chinese growth (+6.7%) at the beginning of the year. Finally, China resisted and achieved slightly higher growth of around 6.8% in the first quarter of 2018 thanks to robust consumption.

Chinese growth does not falter. China’s economic growth stabilized at 6.8% in the first quarter, holding up better than expected thanks to robust consumption, despite a slowdown in industrial production. The Asian giant’s gross domestic product (GDP) grew in the first three months of the year at the same pace as in the last quarter of 2017, the National Statistics Office (NSO) announced on Tuesday 17 April.

This is better than the median forecast of 13 analysts surveyed by the AFP, who were expecting the world’s second-largest economy to slow slightly (+6.7%). They pointed to the cooling of the real estate sector and the slowdown in credit, at a time when Beijing is trying to contain the country’s huge debt and the resulting financial risks… even if it means curbing the financing of the activity.

“Growth momentum remains strong”

However, the economy remained buoyed by still stable domestic consumption: retail sales, the barometer of household purchases, rose by 10.1% year-on-year in March, accelerating more than expected compared with their performance in January-February (+9.7%). “Growth dynamics remain vigorous,” and the robustness of consumption shows that the rebalancing of the growth model towards domestic demand is “continuing its course”, ANZ bank analysts noted. In particular, online sales continued to soar, jumping 35% year-on-year over the quarter as a whole, accounting for more than 20% of retail sales.

On the other hand, Chinese industrial production fell sharply in March, with an increase of 6%, below analysts’ forecasts. For Commerzbank economist Hao Zhou, trade friction “darkens prospects for both trade and growth. US President Donald Trump threatens to tax 150 billion dollars worth of Chinese imports, while the communist regime details its possible reprisals, raising the specter of a customs war.