China’s economy grew 6.9 percent in the first quarter from a year earlier, slightly faster than expected, supported by a government infrastructure spending spree and a frenzied housing market that is showing signs of overheating.
Analysts polled by Reuters had expected the economy to expand 6.8 percent in the first quarter, the same pace as in the fourth quarter of 2016.
First-quarter growth was the fastest since the third quarter of 2015, with March data showing investment, retail sales, factory output and exports all grew faster than expected.
The strong reading should help underpin wobbly global financial markets but adds to worries that China’s government is still relying too heavily on stimulus and “old economy” growth drivers and is not doing enough to tackle risks from an explosive build-up in debt.
While China’s data has been largely upbeat so far this year, many analysts widely expect the world’s second-largest economy to lose steam later in the year as the impact of earlier stimulus measures starts to fade and as local authorities step up their battle to rein in hot housing prices.
Real estate investment growth accelerated to 9.1 percent in the first quarter from a year earlier, as the pace of new construction starts quickened despite intensified government cooling measures.
Though policymakers have pledged repeatedly to push reforms to head off financial risks and asset bubbles, the government is seeking to keep the world’s second-largest economy on an even keel ahead of a major leadership transition later this year.
The government is aiming for growth of around 6.5 percent in 2017, slightly lower than last year’s target of 6.5-7 percent and the actual 6.7 percent, which was the weakest pace in 26 years.
Economic data was up across the board in March, with factory output increasing at the fastest pace since December 2014 and firms stepping up capital investments after a slowdown last year.
Industrial output rose 7.6 percent in March, with steel output the highest on record, according to Reuters data, adding to evidence of a global manufacturing revival that is buoying prices of industrial materials from iron ore to coking coal.
Supposedly, the weakest growth in 26 years is 6.7%.
Bear in mind, I charted 6.7% when that was the weakest growth for 26 years.
By the way, please note that pension plan assumptions are in the general range of 6.5% to 7.5% annual growth.