One of China's industrial production - Photo: Privacy

JAKARTA (TheInsiderStories)China’s economy showed positive signs in the first quarter (1Q) of 2019, supported by industrial growth, accelerated revenue and lower unemployment. The economy of the world’s second-largest country rose 6.4 percent in the 1Q, faster than the 6.3 percent market forecast. This figure shows China’s economy has stabilized after slowing every quarter last year, official data showed on Wednesday (04/17).

According to the National Bureau of Statistics (NBS) report, growth with GDP reaching ¥21.343 trillion (US$3.2 trillion) beat market estimates because growth remained stable in the first quarter despite weak global demand, the US trade war and the debt war.

The figure matched the 6.4 percent growth posted in the last quarter (4Q) 2018, but significantly below last year’s 6.8 percent first quarter growth rate.

The rapid growth of industrial output and consumer demand strengthened amid the government’s pro-growth policies, judged to have helped stabilize the sentiment met by trade disputes with the US, said NBS.

In March industrial output rose 8.5 percent year-on-year compared to only 5.3 percent in the January-February period.

Tertiary industrial value added, which accounts for 57.3 percent of GDP, rose 7 percent, increasing by 0.6 percentage points compared to 1Q 2018; industrial sector grew 6.1 percent and agriculture 2.7 percent. Consumption continues to be a mainstay in increasing demand, contributing 65.1 percent to 1Q economic growth.

Output expanded at a stronger level for all components: manufacturing (9 percent vs. 5.6 percent in January-February), utilities (7.7 percent vs. 6.8 percent), and mining (4.6 percent vs. 0.3 percent).

For the first three months of 2019, industrial production increased 6.5 percent compared to the same period the previous year.

Meanwhile, retail sales rose 8.7 percent year-on-year in March, faster than the 8.2 percent increase in the previous period and above market expectations of 8.4 percent increase. For 1Q 2019, retail sales grew by 8.3 percent from the same period the previous year.

From January-March, fixed asset investment rose 6.3 percent from a year earlier, stronger than 6.1 percent growth in the previous quarter and in line with market consensus.

Public investment rose further (6.7 percent vs 5.5 percent in January-February) while private investment growth declined (6.4 percent vs. 7.5 percent). Sectorally, fixed asset investment recovered for utilities (0.7 percent vs -1.4 percent) and water maintenance, environment and public facilities management (1.0 percent vs. -0.4 percent).

Meanwhile, growth in asset investment remained slow for: mining (14.8 percent vs. 41.4 percent); transportation, storage and post industry (6.5 percent vs. 7.5 percent); agriculture, forestry, livestock; fisheries (2.8 percent vs. 4.0 percent), and manufacturing (4.6 percent vs. 5.9 percent).

Figures released by the NBS also showed China’s exports grew 0.9 percent in the 1Q, while imports shrank 4.4 percent, resulting in a trade surplus of 3.5 percent.

While the unemployment rate surveyed in urban areas stood at 5.2 percent last month, down 0.1 percentage points from the previous month. The unemployment rate surveyed from those aged between ages 25-59 was 4.8 percent.

Besides, the number of rural migrant workers reached 176.51 million, up 1.2 percent y-o-y, NBS data showed.

Overall, the Chinese labor market is stable, with the bamboo curtain country creating 3.24 million urban jobs in the first quarter, 29.5 percent of the annual target of 11 million jobs in 2019.

All eyes were on Beijing’s infrastructure spending which rose 4.4 percent in the first three months after slumping to 3.8 percent growth last year amid a campaign against debt and financial risk.

In addition, economic growth was also driven by policies by Chinese officials who launched the Rmb2tn ($298 billion) tax deduction package the previous month. Loans by the country’s banking sector reached a record quarterly 5.5 billion.

However, policymakers are still struggling to direct state bank credit to the private sector, especially small and medium enterprises that are hardest hit by the crackdown on the shadow financing channel.

This year, China targets economic growth of 6.0-6.5 percent. Considering achievement in 1Q, China has reached the upper end of the range.

¥1 = US$0.15

Written by Daniel Deha, Email: daniel@theinsiderstories.com