China first-quarter GDP growth seen easing only slightly as trade tensions mount

FILE PHOTO: Workers carry their tools and belongings as they climb down the Jiankou section of the Great Wall, located in Huairou District, north of Beijing, China, June 7, 2017. REUTERS/Damir Sagolj/File Photo

US-CHINA-ECONOMY-GDP:China first-quarter GDP growth seen easing only slightly as trade tensions mount

By Elias Glenn

BEIJING (Reuters) - China likely carried most of its strong economic momentum from last year into the first quarter of 2018, with government crackdowns on financial risks and industrial pollution dragging less on activity than earlier expected, a Reuters poll showed.

Beijing is looking to keep the economic balancing act intact even as it faces rising trade tensions with its largest trading partner, the United States, that could impact billions of dollars in cross-border trade.

A poll of 60 economists showed growth in gross domestic product likely eased marginally to 6.7 percent in the first quarter from a year earlier, compared with the 6.8 percent clip in the previous two quarters.

At the start of the year, analysts were penciling in a first-quarter slowdown to 6.6 percent.

The consensus forecast indicates growth remained comfortably above the government's target of around 6.5 percent for the full year, which could give policymakers more confidence to step up efforts to reduce risks in the financial system and clean up the environment.

China's economic data so far this year has pointed to steady if slightly slower growth from 2017, with factory output holding up despite smog controls and consumer spending still relatively resilient.

Central bank governor Yi Gang said on Thursday that first quarter economic data has so far been slightly better than expected.

China will release first quarter GDP on Tuesday, along with March industrial output, retail sales, property sales and investment, and fixed asset investment data.

Economists in the poll estimated GDP grew 1.5 percent quarter-on-quarter, easing from 1.6 percent in the fourth quarter, though only 15 analysts gave sequential forecasts.

Data on Friday showed export growth slowed in the first quarter in yuan terms, indicating overseas demand may not provide the same boost to overall GDP as it did last year, when the economy posted its first pick-up in growth since 2010.

Analysts say the main risk to China's economy is now centered on the escalating trade dispute with the United States.

Washington and Beijing have threatened tit-for-tat tariffs in recent weeks, stemming from U.S. accusations of unfair Chinese trade practices.

But no hard timeline has been set by either side for implementation, offering hope of a compromise that would reduce the fallout for both sides and collateral damage for other trade-reliant Asian economies plugged into China's supply chains.

"Both the choice of Section 301 and the number of products included in the list under investigation point to the U.S. protectionist wind against China being very different, and frankly much more worrisome, than past ones," Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis, said in a note on Monday.

A researcher with China's state planning agency said last week that China's economy will see little impact from the trade dispute, as the country's vast domestic market can compensate for any external impact.

Separate data on Friday showed China is making solid progress in reining in off-balance sheet lending that largely prompted the sweeping crackdown by regulators.

Total credit in the economy in the first quarter fell nearly 20 percent on-year, though some economists think Beijing will not tap the brakes too hard and risk a sharper economic slowdown.

The "sharp decline in March is unlikely to be sustained over (an) extended period of time", economists at China International Capital Corporation said in a note Friday.

China "will still strive to strike the balance between the medium-long term goal of financial deleveraging vs. maintaining relatively stable liquidity conditions and growth momentum," they wrote.

While economic growth could bounce back in spring due to seasonal factors such as a pick-up in construction, analysts still maintain that activity in China will start to cool eventually, weighed down by a cooling property market and rising borrowing costs.

(Reporting by Elias Glenn; Editing by Kim Coghill)

Related News

Taliban suicide attacks, shootout kill 16 in...

Mar 2, 2017

Twin Taliban suicide bombings and a shootout with Afghan security forces that followed one of the...

At least one dead, 35 wounded in Kabul...

Mar 1, 2017

US-AFGHANISTAN-BLAST-CASUALTIES:At least one dead, 35 wounded in Kabul attacks-Afghan official

Taliban claim attacks in Afghan capital, at least...

Mar 1, 2017

US-AFGHANISTAN-BLAST:Taliban claim attacks in Afghan capital, at least 15 dead

Taliban claim attacks in Afghan capital, at least...

Mar 1, 2017

US-AFGHANISTAN-BLAST:Taliban claim attacks in Afghan capital, at least 15 dead

Death toll from Afghanistan attacks climbs to 22

Mar 2, 2017

The Afghan Health Ministry says the death toll from simultaneous suicide bombings in the capital...

Afghan women fencers aim to parry prejudice

Mar 8, 2017

US-WOMENS-DAY-AFGHANISTAN-FENCING:Afghan women fencers aim to parry prejudice

About Us

Get yourself immersed in engaging topics right here. Daily World Feed is a multi-platform media, providing you latest breaking news straight from the industry.

Contact us: sales[at]dailyworldfeed.com

Subscribe Now!