In what comes as welcome news to an economy in transition, China’s GDP has increased for a second consecutive quarter. The pickup in growth experienced during the first quarter of the year was largely attributable to an increase in industrial production, credit growth and a booming real estate sector.
With consumption contributing more strongly toward growth, there are indications that China’s economic transformation is progressing well. At the same time, there is enough momentum behind investment to ensure a fast pace of growth in the second quarter of 2017. With good times ahead for the economy, picking up Chinese stocks like a smart option for investors.
GDP Rises, Indicators Pick Up
In the first quarter, China’s GDP increased by 6.9% on an annual basis. This was the strongest pace of growth witnessed in 18 months and has exceeded most estimates. Further, it remains well above the 6.5% pace for 2017 predicted by Premier Li Keqiang. Growth picked up pace toward the end of the first quarter, indicating that this momentum is likely to be carried forward into the second quarter of the year.
A series of bullish economic indicators was released along with the GDP reading, all of which depicted a robust economy. During the first quarter, industrial production increased by 6.8% even as year-over-year growth for March came in at 7.6%. Retail sales increased at an annual rate of 10.9% last month.
Additionally, fixed asset investment increased by 9.2% during the first quarter, significantly higher than the pace of 8.1% experienced last year. Meanwhile, real estate investment increased by 9.1% during the same period. In March, new home sales surged by 18% on a yearly basis, illustrating frenzied activity in China’s housing sector.
Consumption Strengthens, Investment Momentum Intact
Currently, China seems to be progressing steadily towards its goal of becoming a consumption driven economy. This was borne out by the fact that consumption’s contribution to growth in the first quarter has increased from last year’s level of 64.6% to 77.2%.
