China Economy Grows More Than Expected
The Chinese economy grew more than expected in the first three months of the year, new data shows, as China built more factories and exported huge amounts of goods to counter a severe real estate crisis and sluggish spending at home. To stimulate growth, China, the world’s second-largest economy, turned to a familiar tactic: investing heavily in its manufacturing sector, including a binge of new factories that have helped to propel sales around the world of solar panels, electric cars and other products. But China’s bet on exports has worried many foreign countries and companies. They fear that a flood of Chinese shipments to distant markets may undermine their manufacturing industries and lead to layoffs. China’s National Bureau of Statistics said the economy grew 1.6 percent in the first quarter over the previous three months. When projected out for the entire year, the first-quarter data indicates that China’s economy was growing at an annual rate of about 6.6 percent. “The national economy made a good start,” said Sheng Laiyun, deputy director of the statistics bureau, while cautioning that “the foundation for stable and sound economic growth is not solid yet.” Retail sales increased at a modest pace of 4.7 percent compared with the first three months of last year, and were particularly weak in March. China needs robust consumer spending to bring down persistently high youth unemployment and to help companies and households cope with very high levels of debt. Economists at the Federal Reserve Bank of New York warned last month that China is experiencing a “sugar high” of factory construction fueled by heavy bank lending. For the year, China has set a growth target of about 5 percent, a goal that many economists had viewed as ambitious, although some have recently upgraded their forecasts. Last year, China’s economy grew 5.2 percent. Output was 5.3 percent higher in the first three months of this year than during the same period last year, the statistics bureau announced on exceeding economists’ forecasts. A breakneck pace of factory investments, up 9.9 percent from a year ago, was central to China’s growth. Strong exports early this year also helped. The value of exports rose 7 percent in dollar terms in January and February from a year earlier, and 10 percent when measured in China’s currency, the renminbi. But the actual contribution from exports to the country’s economy was considerably greater, as falling prices obscured the full extent of China’s export gains. Guo Tingting, a vice minister of commerce, said at a news conference last month that the physical volume of exports had climbed 20 percent in January and February over last year. Exports faltered somewhat in March, however.