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ECONOMY: Positive Data
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Positive Data
Numbers higher than expected
By Morgan Brady

BT 201905 economy 01积极的数据




BT 201905 economy 02Data released from China for last month, March, and thus, the first quarter of the year, were a surprise to many investors and economists. The numbers were much higher than expected and were a cause for optimism. The numbers were positive, and this prompted many analysts to review their expectations about an impending slump in the Chinese economy as a result of the trade war with the US, among other factors.

According to statistics, the Chinese economy grew by 6.4% in the first quarter of the year, on a year-on-year basis. This is higher than the 6.3% that analysts had predicted, and it is the same rate of growth achieved in the last quarter of 2018. It is 0.4% higher than the rate in the first quarter of 2018.

Retail sales grew in the first quarter and in March

Other indicators were also positive and above expectations. Retail sales of consumer goods grew by 8.3% nominally and 6.9% in real growth in the first quarter. Total sales reached 9.7 billion Yuan in value. Retail sales of consumer goods in urban areas reached 8.3 trillion yuan, and in rural areas reached 1.4 trillion Yuan. Growth in rural areas was higher than in urban areas. Online sales of goods and services were 2.2 trillion Yuan, an increase of 15.2% on a year-on-year basis. The retail sales of consumer goods grew by 0.85% in March (on a month-on-month basis).

BT 201905 economy 05Industrial production makes a surprise jump

Industrial production grew by 8.5% on a year-on-year basis in real terms. This represents an increase of 3.2 from the previous two months. Looking at the categories, the value added of mining and quarying went up by 4.6% on a year-on-year basis, higher by 4.3 percentage points from the same rate in the first two months. The value added of manufacturing increased by 9 percent, which is higher by 3.4 percent. The value added of production and distribution of electricity, heating power, gas, and water went up by 7.7 percent, higher by 0.9 percentage points in the previous two months.

The biggest growth was seen in joint-stock enterprises, which saw an increase in production by 10% on a year-on-year basis. State holding enterprises saw an increase in production by 4.7 percent, and enterprises funded by foreign investors saw an increase of 4.2 percent.

Looking at different regions, the biggest increase in production was seen in the eastern region, which saw an increase of 10.3 percent, followed by the central region which saw an increase of 9.6 percent, and then the northeastern region by 8 percent, and then the western region by 7.5 percent.

BT 201905 economy 03Fixed asset investments saw an increase

Investments in fixed assets in the first quarter of the year amounted to 10.1 trillion Yuan. This is higher by 6.3% on a year-on-year basis. It is also better than the results in the first two months of the year. Investments in fixed assets have been growing steadily since August, 2018.

In terms of subsections of those investments, infrastructure investments (excluding electric power, heat power, gas, and water) went up by 4.4% year-on-year. Investment in industry went up by 4.4% year-on-year, and the growth rate was 1.4 percentage points lower than that in the first two months.

The biggest increase was seen in the central region, which saw an increase in fixed asset investments, higher by 0.2 points than in the first two months. In the eastern region, investments increased by 4.3% on a year-on-year basis. In the western region, investments increased by 7.8 percent. In the northeastern region, there was an increase of 2.9 percent.

BT 201905 economy 06The trade balance makes a big comeback

The dollar denominated exports have risen remarkably in March by 14.3 percent, which is much higher than the expected 7.3% increase. Imports, however, declined by 7.6 percent, which is worse than the expected 1.3% decline. China’s trade surplus with the world stood at $32.64 billion, whereas its trade balance with the US was at $20.3 Billion.

Despite the positive results, many analysts believe that this increase is caused by seasonal fluctuations in demand, and they do not believe that the global slowdown is over.

BT 201905 economy 04Summary

China’s economy has witnessed a rebound, as indicated by the recently released numbers. Retail sales, industrial production, fixed asset investments, and trade balance, saw positive developments. Some economists believe that the government’s efforts to stimulate the economy are showing some effects. One factor that may have contributed to the improvement was the progress made in regard to the trade talks with the United States. Both parties appear to be closer to reaching an agreement. In any event, and despite the positive numbers, the Chinese economy needs to see a series of further positive data to ensure continuous acceleration and an upward trend.

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