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China's Economy Stabilized and Gathered Good Pace in the First Quarter of 2016
2016-04-18 23:00

China's National Development and Reform Commission and the National Bureau of Statistics recently released national economic data of the first quarter, showing that the Chinese economy stabilized and gathered good pace.

1.First quarter GDP growth is in line with expectations: According to preliminary accounting, calculated at comparable prices, gross domestic product (GDP) rose 6.7% in the first quarter to 15.8526 trillion yuan. In 2015 price terms, first quarter GDP increased by 985.1 billion yuan, which showed an increase of 22.2 billion yuan over the previous year. Looking at GDP growth by industry, primary industry rose 2.9% to 880.3 billion yuan; secondary industry rose 5.8% to 5.951 trillion yuan; tertiary industry rose 7.6% to 9.0214 trillion yuan.

2.Investment is accelerating: From January to February, investment in fixed assets (excluding rural households) jumped 10.2% compared to the previous year, the growth rate increased 0.2 percentage points, and the cumulative growth rate picked up for the first time since last year; March grew by 0.86% compared to the previous month; cumulative increase of 10.7 % compared to the previous year (notwithstanding price factors, actual increase of 13.8%). The growth rate accelerated 0.7 percentage points compared to last year, 0.5 percentage point faster than in January - February. In January - February, the total investment in new projects grew 41.1%, the highest monthly value since 2010. This positive trend continued in March.

3.Overall price level rose: In the first quarter, consumer price index (CPI) rose 2.1%. Under the influence of policy expectations, restocking, production cuts, overselling, and other factors, prices of major raw materials such as iron and steel and electrolytic aluminum rose significantly. In March, industrial producer prices (PPI) increased 0.5% compared to the previous month, the first time prices increased since January 2014; year on year decline also narrowed by 0.6 percentage points compared to the previous month.

4.Corporate profits turned around: Impacted by the accelerating growth of product sales, narrowing decline of PPI and other factors, profit of industrial enterprises above a designated scale reached 780.7 billion yuan in the first two months, an increase of 4.8% compared to the previous year. New profits of 35.54 billion yuan turned around last year's falling profit and represented the first positive monthly growth since June 2015.

5.Real estate investment and trading volume rebounded significantly: Impacted by real estate policy adjustment and other factors, in the first quarter, development and investment in domestic real estate reached 1.7677 trillion yuan, a nominal growth of 6.2% compared to the previous year (after deducting price factors, actual growth was 9.1%). Growth rate accelerated by 5.2 percentage points compared to last year, and accelerated 3.2 percentage points compared to January - February. Residential investment increased by 4.6%, with 3.1992 trillion yuan of real estate development enterprises funds in place, showing an increase of 14.7% from the previous year. Total area dedicated to construction of new housing reached 282.81 million square meters, an increase of 19.2% from the previous year, including an increase of 14.8% of residential area. In some cities, sales in the real estate market accelerated significantly, in particular commercial housing, selling 242.99 million square meters in total area, up 33.1% from the previous year. Sale of residential housing increased by 35.6% in total area. National commercial housing sales totaled 1.8524 trillion yuan, an increase of 54.1% compared to the previous year. Residential housing sales increased 60.3%.

6.Revenue growth accelerated: Impacted by the rapid increase of real estate-related taxes and other factors, The first two months of China's public budget revenue grew 6.3% compared to the year before, showing respectively an increase of 4.6 percentage points over the same period last year and 0.5 percentage points over the entire year. It was also the fastest growth since January last year. Local fiscal revenue achieved double-digit growth and an increase of 10% in the first two months.

7.Market forecast rebounded: In March, the manufacturing PMI was 50.2%, rebounding 1.2 percentage points compared to February. This was the first time it rebounded above the entrepreneur confidence threshold since last August. Positive changes began to manifest; non-manufacturing business activity index was 53.8%, up 1.1 percentage points from February, a relatively large increase of the past two years and higher than the level of the previous year. The pace of expansion in the non-manufacturing domain accelerated.

8.Steady income growth: In the first quarter, the national per capita disposable income was 6619 yuan, up 8.7% in nominal growth compared to the previous year, with an actual increase of 6.5% after deducting price factors. Urban per capita disposable income was 9255 yuan, up 8.0 percent from the previous year with an actual increase of 5.8% after deducting price factors; per capita disposable income of rural residents was 3578 yuan, up 9.1 percent from the year before with an actual increase of 7.0% after deducting price factors. Per capita income of urban and rural residents differed by 2.59%, a reduction of 0.02% compared with the same period last year. National median for per capita disposable income was 5670 yuan, up 8.7% in nominal growth compared to the same period last year. Average monthly income for migrant laborers was 3273 yuan, an increase of 9.1% compared to the previous year. The employment situation remained stable, with 318 million new urban jobs created, meeting the annual target of 31.8%.

9.Industrial structure continued to optimize: The agriculture sector is generally stable. In January – February, the rate at which Industrial value is added increased by 5.4%, in March 6.8% (an increase of 1.4 percentage points). Related electricity consumption increased nearly 6 percentage points and total cargo volume rose by nearly 4 percentage points. Tertiary industry continued to grow rapidly. Contribution of the services sector to the gross domestic product (GDP) was 56.9%, up 2.0 percentage points over the same period last year, 19.4 percentage points higher than the secondary industry. Energy conservation continued to make new progress. In the first quarter, unit of GDP energy consumption fell 5.3%.

10.Better coordinated regional structure: Value contribution of above-scale industries in the central and western regions increased by 7.0% and 7.3% respectively, faster than the 0.7 percentage point and 1.0 percentage point in the eastern region; investments in central and western region fixed assets (excluding farmers) increased 13.3% and 13.2% respectively compared to the previous year and 2.3 and 2.2 percentage points faster than the eastern region.

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