China's economy, which is under pressure from industrial production and consumer expenditure, has grown more than expected in the first quarter of this year (January-March). However, analysts warn that the high tariff imposed on US President Donald Trump could disrupt the speed in the coming days. It is thought to be the biggest challenge for the world's second largest economy. British news agency Reuters reported.
According to data released on Wednesday, China's GDP growth rate in the first quarter stands at 9.5 percent, which is equivalent to the fourth quarter of last year. According to a Reuters survey, analysts predicted 5.7 percent growth. However, it is feared that the export sector began to shrink the export sector under the influence of US tariffs.
Trump recently raised tariffs on Chinese products, in response to which Beijing also imposed counter -tariffs on US products. This trade war has increased tensions between the two largest economies in the world and created uncertainty in the international market.
Nomura economists say there are two major stresses in the Chinese economy at the same time-the real estate sector internally internally and the US-China trade war from outside.
Ju Tianchen, senior economist in the Economist Intelligence Unit, said speedy and strong policy measures need to cope with excessive pressure on US tariffs.
Last year, China's exports acquired more than $ a trillion surplus, which helped keep the economy a bit stable. However, the long -term recession of the real estate sector is hindering the speed of restoring internal demand.
Prime Minister Lee Kiang has warned that Chinese exporters will face major external changes. He promised to increase the cost of internal consumer. However, due to Trump's tariff policy, exports are expected to decrease in the coming months.
Other indicators of the economy have shown mixed images. Retail sales increased by 8.5 percent in March (January-February 5 percent). The increase in industrial production was 5.7 percent (in the first two months was 5.7 percent). Real estate investment has decreased by 5.7 percent in the first quarter.
However, the pressure of youth unemployment and inflation has made the economy recovery uncertain. ANZ chief China economist Raymond Young says good GDP numbers do not reflect the health of the entire economy. Deflation and Youth Unemployment are still the main concern.
Chinese policymakers have repeatedly said that they have adequate resources and policy materials to strengthen the economy. Multiple financial incentives were given at the end of last year and it is expected that more assistance will be available in the coming months.
However, Fitch recently reducing China's Sovraine credit rating, referring to public debt and revenue risk. Economists say China will probably have to go to large revenue incentives to cope with tariffs.
According to the UBS forecast, China's growth in 2021 could be 5.5 percent. The previous forecast was 5 percent). Nomura and ANZ have reduced their growth forecast to 5 percent and 5.2 percent respectively.
According to analysts, China will have to handle a major push this time, like the World Financial Crisis of 20 or the Covid-1 epidemic of 2021. China does not have too much alternative against Trump's tariff policy – they now have to emphasize increasing consumer expenses and increasing internal productivity.
