China’s economy appears to be maintaining the momentum of the second half of last year, driven by the government’s traditional formula of state-led infrastructure spending and real estate investment.
The world’s second-largest economy grew 6.9% in the first quarter, topping economists’ estimates of a 6.8% increase. Over the previous five consecutive quarters, China had reported growth of either 6.7% or 6.8 percent.
The first-quarter report lays “a solid foundation for accomplishing the whole-year growth target” of 6.5%, the National Bureau of Statistics said.
BBC News said the data suggest that growth is stabilizing but “also demonstrate that Beijing is relying on the same old tricks to drive its economy.”
“Government spending on infrastructure, a booming property market and taking on debt were all things China’s leadership has pledged to move away from in the transition towards a new, modern, open economy,” it noted. “Yet all three factors are still evident in this data, suggesting that the ‘old’ model of growth that relies so much on the state is alive and well.”
Spending by the central and local governments rose 21% in the first quarter from a year earlier, while China produced a record amount of steel, another “old economy” growth driver.
Real estate investment also remained robust, expanding 9.1%, while new construction quickened despite intensifying government measures to cool soaring home prices.
“Most analysts agree the heated property market poses the single biggest risk to China’s growth, but predict the cumulative weight of property curbs will eventually temper activity, not produce an outright crash,” Reuters said.
Credit data released on Friday showed that bank loans to households, a category in which mortgage lending plays a leading role, rose 24.6% in March compared to the same month a year ago, even as other categories of lending began slowing somewhat.