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Friday, April 15, 2016, 14:36

China's economy continues to slow in Q1

By Xinhua
China's economy continues to slow in Q1
Graphic charting China's quarterly growth. (Photo / AFP)

BEIJING - China's gross domestic product grew 6.7 percent year on year in the first quarter of 2016 to reach 15.9 trillion yuan (US$2.4 ), the National Bureau of Statistics said Friday.

The growth further slowed from the previous quarter's 6.8 percent, which was already the lowest quarterly rate since the global financial crisis.

The growth further narrowed from the previous quarter's 6.8 percent, which was already the lowest quarterly rate since the global financial crisis.

However, the figure was in line with market expectations and remained within the government's targeted range of between 6.5 and 7 percent for 2016.

New growth momentum is gathering and some major indicators have seen positive changes, NBS spokesperson Sheng Laiyun told a press conference, calling the first-quarter performance "a good start" to this year.

Growth picked up slightly from the 10-percent increase recorded in 2015 and the first two months of this year.

It marked steady and moderate growth in China's fixed-asset investment, money used to purchase and build factories, machines, property and other fixed facilities.

In breakdown, fixed-asset investment in agriculture was up 25.5 percent in Q1, followed by 12.6 percent for the service sector and 7.3 percent for industry.

China's fixed-asset investment grew 10.7 percent in the first quarter of 2016, compared with the 10-percent growth recorded in 2015, official data showed.  At the same time, China's value-added industrial output, an important economic indicator, expanded 5.8 percent year on year in the first quarter, accelerating from the 5.4-percent increase for the January-February period.

The service sector grew 7.6 percent, outpacing a 2.9-percent increase in the primary industry and 5.8 percent in the secondary industry. It accounted for 56.9 percent of the overall economy, up 2 percentage points from a year earlier, Sheng said.

A prolonged industrial glut, sagging foreign trade and cooling property investment dragged down China's growth in 2015 to 6.9 percent, the slowest pace in 25 years.

Retail sales growth quickened to 10.5 percent. The first quarter reading was 0.4 percentage points lower than that recorded last year. In March, retail sales were up 10.5 percent year on year, faster than the growth rate in the first two months this year, according to data released by the National Bureau of Statistics (NBS).

Urban consumers contributed the lion's share of the increase though rural consumer spending climbed faster than that by urbanites.

Also, investment in China's property sector rose 6.2 percent year on year in the first quarter of 2016, official data showed. The expansion continued to pick up following the 3-percent increase for the January-February period and the 1-percent growth for entire 2015.

According to the NBS, investment in residential housing grew 4.6 percent in the first quarter. Sales revenue surged 54.1 percent, compared with the 14.4-percent gain seen in 2015.

NBS figures also showed the land area purchased by property developers dropped 11.7 percent, much better than the 31.7-percent decline recorded in 2015.

China's property sector has shown signs of improvement in the last three months, with home prices rising in big cities including Beijing, Shenzhen and Shanghai. But on an annual basis, the inventory was still 13.1 percent higher than the same period of 2015.

Core industries

China's March refinery throughput fell 0.2 percent compared with the same period a year earlier to 44.91 million tonnes, or 10.58 million barrels per day (bpd), NBS data showed on Friday.

The daily run rate in March was largely unchanged from the 10.59 million bpd recorded in the first two months this year. China's crude oil output fell 3.9 percent on year to 17.37 million tonnes, the bureau said.

China produced 294 million tonnes of coal in March, down 4.5 percent on last year. Production over the first quarter reached 811.27 million tonnes, down 5.3 percent on the year and March coking coal output used in steel production fell 5.3 percent on the year to 36.05 million tonnes.

China, the world's top steep producer, produced 192.01 million tonnes of crude steel in the first quarter, down 3.2 percent from a year ago

'Bottoming out'

Earlier this week, the International Monetary Fund raised its forecast for China's growth in 2016 and 2017 to 6.5 percent and 6.2 percent respectively, both up 0.2 percentage points from its January predictions.

Sheng said there are signs of China's economy "bottoming out," but warned of persisting downward pressure due to uncertainty in the global economy and difficulties in the country's structural shift to consumption-driven growth and entrepreneurship.

It will take more time to tell if the stabilization can last, he acknowledged.

"China's future growth is likely to follow an L-shaped trajectory in the long run, but in the near term, it may present a U- or W-shape due to fluctuations," Sheng told reporters.

The positive economic data makes it less necessary for Chinese policy makers to amp up stimulus immediately, analysts said.

With credit accelerating and growth stabilizing, the urgency to push ahead with monetary easing is reduced, while fiscal policy will do more of the work, said Tom Orlik, chief Asia economist of Bloomberg.

Newly-added social finance, a gauge of funds that firms and households get from the financial system, amounted to 2.34 trillion yuan in March, up 1.51 trillion yuan from February, central bank data showed on Friday.

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