China GDP beats, but will there be more stimulus?
Shutterstock/Bernice Williams
LOS ANGELES (MarketWatch) - China's economic growth rate hit 7.5% in the April-June quarter, data out Wednesday showed, beating expectations and opening a debate over whether the government will offer more stimulus, as other statistics painted a more mixed picture.
The uptick in Chinese gross domestic product growth surpassed forecasts that expansion would hold to the 7.4% rate seen in the first quarter, according to separate surveys of economists from Reuters and The Wall Street Journal.
The result was also in line with the government's target of 2014 growth at 'about 7.5%,' as stated by Chinese Premier Li Keqiang.
The mild improvement likely reflected a raft of 'mini-stimulus' measures announced by the government at the start of the quarter, and while most economists saw the latest GDP number as positive, they disagreed over whether it was strong enough to exclude more such stimulus support going forward.
China's economic growth 'this year looks set to remain close to the official government target of 7.5%, [and] subsequently the recent data flow does not demand any type of 'stimulus package' or more broad-based easing,' wrote TD Securities head of Asia research Annette Beacher.
Beacher said that the second-quarter GDP also 'confirmed that once again a 'Chinese hard landing' remains a distant tail risk.'
However, economists at Bank of America-Merrill Lynch weren't so sure, saying that 'there are still strong headwinds as a consequence of the anti-corruption campaign and property downturn.'
Given a high comparison base with last year, China's economy would need to grow 2%-2.1% on a quarterly basis to hit the 7.5% annual target, the Merrill Lynch team said. Compared to the previous quarter, April-June GDP rose 2%.
'We believe Beijing is quite serious about its 7.5% growth target as it needs a stable economic and financial backdrop as it steps up its anti-corruption campaign, so the new government will most likely continue its mini-stimulus in the face of higher base effect and some strong headwinds' in the second half of the year, they wrote.
In any case, the GDP data were strong enough to prompt Australia & New Zealand Banking Group to revise its full-2014 China growth outlook to 7.5% from 7.2% previously, even as it predicted Beijing would lower its GDP expansion target to 7% for next year.
Strong industry, weak housing
The GDP print came amid a gush of other data also released Wednesday, with strong numbers for industrial and retail activity in June but a weak report on housing sales.
Industrial production - which according to Reuters, accounted for 45% of China's economy in 2012 - surprised to the upside, rising by 9.2% from a year earlier against an expected gain of 9%, according to the surveys from The Wall Street Journal and Reuters.
The improvement also marked an acceleration from May's 8.8% growth.
However, data for the real-estate sector, also crucial to the Chinese economy, showed further declines.
Housing sales for the first half of the year were down 9.2% from the same period in 2013, though the figure represented a modest recovery from the 10.2% year-on-year drop for the January-May period. (Chinese housing data are reported on a year-to-date basis.)
Post a Comment for "China GDP beats, but will there be more stimulus?"