The world’s second-biggest economy grew slightly more than expected in the first quarter of 2019, Chinese government figures showed Wednesday. It expanded by 6.4% compared to a year ago, beating economists’ forecasts of 6.3%.
The prospect of a deeper slowdown in China has been one of the biggest concerns for the global economy this year. China’s growth has been hit by a trade war with the United States and government efforts to rein in a huge amount of debt in China’s financial system.
“This confirms that China’s economic growth is bottoming out and this momentum is likely to continue going into months ahead,” said Tai Hui, chief market strategist for Asia-Pacific at investment firm JPMorgan Asset Management.
Chinese government statistics showed that growth in the first three months of the year was supported by strong manufacturing production and greater spending by Chinese consumers.
While China’s current economic growth rate is still its slowest in decades, there have been signs of positivity in recent weeks, with indicators including property prices and bank lending suggesting a more bullish hue.
Analysts said that investors will now turn to the possibility of an agreement on trade issues between the United States and China in the coming weeks. Investors’ “risk appetite should improve as China’s economic downturn risk is contained,” Hui added.
Stimulus starts to bear fruit
Chinese growth has lost momentum following government efforts to crack down on risky lending, which starved many companies of the funds they needed to expand.
The world’s second largest economy has also started feeling the effects of the trade war with the United States, which has resulted in new tariffs on about $250 billion of Chinese exports.
The deteriorating situation in a market that businesses around the world rely upon for growth has had a widespread impact. It has spooked investors and prompted warnings from top companies such as Apple (. )
China’s government last month predicted economic growth of between 6% and 6.5% in 2019. That’s below last year’s 6.6% rate of expansion, which was already China’s slowest annual growth in nearly three decades.
Beijing in response has resorted to hundreds of billions of dollars worth of new measures intended to stimulate the economy, including tax cuts for businesses, infrastructure spending and looser monetary policy.
Experts say the measures are now starting to bear fruit. Analysts at investment firm Jefferies wrote last week that they think economic growth in 2019 could now exceed Chinese government targets.
Analysts have for years questioned the authenticity of Chinese economic data. They suspect China’s National Bureau of Statistics, which reports much of the country’s data, is more focused on making the government look good rather than giving an accurate reflection of its economic health.
“The Chinese published GDP numbers are absolute garbage,” said Leland Miller, CEO of advisory firm China Beige Book, told CNN Business in February. “It’s certainly the consensus that these numbers are unreliable.”