China's 1Q economic growth ticks higher to 6.9 percent

China to post solid, steady first-quarter growth on building boom, but debt risks loom

China to post solid, steady first-quarter growth on building boom, but debt risks loom

"We need to watch closely whether China's top leadership will send a stronger signal to tighten monetary policy shortly".

The big news out of China is all about its economy, namely the estimate-beating first quarter GDP growth of 6.9% reported today.

Still, many analysts expect economic growth to cool later this year as the impact of earlier stimulus measures starts to fade and as local authorities resort to ever-tougher measures in a bid to get soaring home prices under control.

But the growth momentum is not expected to last through the whole year, he added, as the abundant credit growth that fuelled the economic recovery is "now being reversed, (and) we still expect the economy to begin slowing before long".

New residential house prices in Guangzhou, Haikou and Sanya registered month-on-month growth of more than 2 percent in March, according to the NBS data.

Value-added industrial output, a rough proxy for economic growth, expanded by 7.6% in March, compared with a 6.3% increase in the first two months of 2017.

The world's second largest economy rose 6.7 per cent year on year in 2016, the weakest annual expansion in 26 years but still an enviable pace around the globe. Steps announced late a year ago have proved largely ineffective in slowing the property rally juggernaut, but the accumulated measures are expected to curb price rises, construction activity and investment eventually. Experts said government tigthening measures in the sector will show up by the third quarter.

Mao believes the Q1 data shows that China has laid a solid foundation to realize its full-year economic target.

The most-active steel rebar futures prices were down 1.15 percent at 2,918 yuan ($423.90) per tonne at 0243 GMT, on track for a 7.8 percent drop in April, their worst monthly performance since May past year.

Rising inventories and recent falls in steel prices suggest output is growing faster than China's demand, raising worries of a glut later in the year, which could heighten trade tensions with the USA and other major trading partners. Industrial output rose at the fastest pace since late 2014, increasing by 7.6% year-on-year in March.

China's total social financing, the government measure that encompasses total debt including bank loans as well as nonbank and other lending, rose by more than 11% previous year.

It has bumped up interest rates on money market instruments and special short- and medium-term loans several times already this year and further modest increases are expected, especially if USA rates continue to rise. It made up 44 percent of total new yuan loans in March, compared to 32.5 percent in February, according to Reuters calculations using PBOC data.

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