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China's economic growth is cooling to 6.3%: AFP poll



China's economy cooled even further in the first quarter, according to a survey by US analysts, that Beijing had taken experimental measures and tested to cope with lukewarm global demand and the damaging US trade war.

The world's second-largest economy expanded 6.3 percent in the period January-March, according to a survey of 13 economists published before official data on GDP.

It will show the slowest pace of quarterly growth for nearly three decades.

The figure remained in the government-targeted range of 6.0 to 6.5 percent per year, down from 6.6 percent in 2018.

To combat the slowdown, Beijing has boosted economic support in recent months, announcing cutbacks in spending and other amortization to help struggling companies.

Last month Premier Li Keqiang acknowledged "downward pressure," but vowed not to let the economy "slip out of a reasonable range."

Beijing is facing a delicate balance to act as it tries to support private businesses in need of credit, without inflating its debt balloon.

Policy makers have turned the credit taps back after several years of crushing and deleveraging with Friday credit data China's central bank shows financial easing kicking in.

The growth rate of bank loans accelerated to the fastest monthly pace since 2016, said Zhang Liu of Capital Economics, noting that it usually takes six months for credit growth to translate into higher economic activity.

But another economist, Bjorn Giesbergen of RaboResearch, warned that loans have not always reached the private sector "China's debt levels to GDP has been exaggerated."

The problems are just going to get "worse and exponentially" if the new credit no longer flows into the private sector, he told AFP.

The policies enacted this month, such as VAT cuts and a cut in social insurance premiums to be received next month, will help the private sector struggling in China more directly.

Lack of confidence in work

Last year China's infrastructure investment fell to 3.8% on annual growth, down from years of close to 20% expansion.

In recent months, large projects to move the planet that Beijing had been delayed again to attract the economy.

The growth was affected mainly by infrastructure investments, with pre-approved project approvals and huge bond issues, said Natan Hong-Lao, an economist at DBS.

"Consumer confidence remains fragile due to lack of job security," he said.

China's stable unemployment rate rose to 5.3% in February, from 4.9% in December, while retail sales growth remained at 15 years.

The International Monetary Fund on Tuesday raised its growth forecast for annual growth to 6.3% from 6.2% citing China's economic incentives and tensions with the US.

Trade War

All signs indicate that the US and China are closing on a trade deal after nine rounds of high-level talks between the two economic giants.

Last year, Washington and Beijing set tariffs on more than $ 360 billion in bi-directional trade, biting into their manufacturing sectors.

Chinese data on Friday showed the politically sensitive trade surplus with the US expanded to $ 20.5 billion last month from $ 14.7 billion in February.

One prominent point in the talks was the insistence of US officials that any final agreement had teeth – but the negotiators appeared to have made a decision.

"We agreed more or less on the enforcement mechanism," said US Treasury Secretary Stephen Manoch.

But no date was set to bring President Donald Trump and his counterpart Shi Jiefing on signing the deal.

"We believe that growth will reach the floor in the second quarter in response to macroeconomic policy and improve confidence as a result of easing tensions with the US," said Tommy Wu of Oxford University in Economics.


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