By any standards, growth of 6.7% seen in the Chinese economy represents an astonishing level for any major economy and contrasts with the modest growth seen in Japan, the USA and the Eurozone. On the negative side of the ledger, 6.7% represents the slowest quarterly expansion of the Chinese economy for seven years, but is bang on target with Chinese expectations. It represents a softening from the 6.8% growth seen in the final quarter of 2015, but provides ammunition to the cup half-full brigade that believes it shows that the world’s second largest economy is slowing. Concerns about the declining economic activity in China were a large component of the steep falls seen on global stock markets in the first few months of 2016. A more legitimate concern would be over just how reliable Chinese economic data is given that other major economies lack China’s uncanny knack of always hitting growth targets, surpassing them or coming in just a shade lower. China must be a leading producer of crystal balls if this data is always to be believed.
Investments in infrastructure and industrial goods spiked by 10.7% compared to their Q1 2015 level and consumer spending was strongly higher with retail sales surging by 10.5% in the same time period.
The Chinese government has set a broader and more modest (by Chinese standards) for growth in the full year for 2016 in a band from 6.5 to 7%.
China is attempting to rebalance its economy to be more led by domestic consumer demand rather than based on the exportation of cheap (some would say dumped) goods to the rest of the world. The long standing hope in the rest of the global economy is that this move would open China’s enormous domestic market up to imports from the global economy, but only time will tell what the balance between imports and domestically produced goods will be.