Beijing unveils modest measures to counter slowing of Chinese economic growth in Q1
China’s economic growth continues to slow. Between January and March it expanded at the lowest pace in a year and a half
An employee works at a Chinese automobile factory in Hefei
Beijing quickly unveiled new pro-growth measures including cutting the amount of cash some village banks have to hold in reserve at China’s central bank so that money could bolster the agriculture sector. In the first three months of this year the economy expanded by 7.4 percent, down from 7.7 percent in the fourth quarter of 2013 and 7.8 percent in the quarter before that.
There were already signs China’s economy was losing more momentum than expected with exports in March down for the second month in a row and imports dropping sharply. Still economists, like HSBC’s John Zhu, are not disturbed. He said China is still on track to meet his bank’s predictions, “Our full year 2014 forecast actually hasn’t changed this year. We’ve been at 7.4 percent for the whole of the year and so we don’t think today’s number has a material impact on that. So we’re still fairly comfortable with 7.4 percent for the year.”
However the manufacturing sector continues to struggle. Activity data for March, which was released at the same time as the GDP report, showed that factory output growth was not as strong as expected. It hit a near five-year low of 8.8 percent. On the plus side, for a government trying to rebalance the economy by stimulating domestic demand, retail sales were up 12.2 percent, slightly above forecasts.