China kicked off 2017 with its strongest economic growth since 2015. Over the weekend, China reported 6.9 percent GDP growth in the first quarter, news that has U.S.-listed Chinese stocks trading higher on Monday morning.
China’s 6.9 percent first-quarter growth topped analyst expectations for 6.8 percent growth and came in well ahead of President Xi Jinping’s long-term goal of 6.5 percent growth.
A strong Chinese economy is good news for major Chinese companies Alibaba Group Holding (ticker: BABA), Baidu ( BIDU) and JD.com ( JD). All three stocks opened up the week trading modestly higher.
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“China, at least in the near term, is in a sweet spot with growth momentum strong and inflation pressures easing,” says Rob Subbaraman, Nomura Holdings chief economist for Asia. “Whichever way you dice it, the first quarter was a strong set of numbers.”
China’s fast start to 2017 has Wall Street taking notice. JPMorgan Chase economist Zhu Haibin raised the firm’s full-year economic growth projections for China from 6.6 percent to 6.7 percent. Nomura analyst Yang Zhao also raised full-year growth estimates from 6.5 percent to 6.7 percent.
Chinese industrial production growth reached 7.6 percent in the month of March, its highest level since late 2014. Retail sales also topped expectations in the first quarter.
Some U.S. economists have questioned the validity of China’s economic numbers. J Capital analyst Anne Stevenson-Yang says China inflated GDP growth numbers by as much as 0.4 percent in 2016.
“The motive to do so is apparent in the twin needs to shore up the currency and promote inbound investment,” Stephenson-Yang said last year.
China’s government controls the nation’s largest banks and a handful of its largest companies. The government has also been aggressively investing in infrastructure projects such as building new roads and rail lines.
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Since 2015, China’s economic growth has been remarkably consistent. In the past 11 quarters, China has reported year-over-year GDP growth between 6.7 percent and 7.2 percent. From 2005 to 2010, China’s GDP growth fluctuated in a much larger range from above 14.0 percent to about 6.2 percent.
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Chinese Stocks Drift Higher on Impressive GDP Growth originally appeared on usnews.com
