The world’s second-biggest economy grew slightly more than expected in the first quarter of 2019, Chinese government figures showed Wednesday. It expanded by 6.4% compared to a year ago, beating economists’ forecasts of 6.3%.
“This confirms that China’s economic growth is bottoming out and this momentum is likely to continue going into months ahead,” said Tai Hui, chief market strategist for Asia-Pacific at investment firm JPMorgan Asset Management.
Chinese government statistics showed that growth in the first three months of the year was supported by strong manufacturing production and greater spending by Chinese consumers.
Analysts said that investors will now turn to the possibility of an agreement on trade issues between the United States and China in the coming weeks. Investors’ “risk appetite should improve as China’s economic downturn risk is contained,” Hui added.
Stimulus starts to bear fruit
Chinese growth has lost momentum following government efforts to crack down on risky lending, which starved many companies of the funds they needed to expand.
The world’s second largest economy has also started feeling the effects of the trade war with the United States, which has resulted in new tariffs on about $250 billion of Chinese exports.
China’s government last month predicted economic growth of between 6% and 6.5% in 2019. That’s below last year’s 6.6% rate of expansion, which was already China’s slowest annual growth in nearly three decades.
Experts say the measures are now starting to bear fruit. Analysts at investment firm Jefferies wrote last week that they think economic growth in 2019 could now exceed Chinese government targets.
“The Chinese published GDP numbers are absolute garbage,” said Leland Miller, CEO of advisory firm China Beige Book, told CNN Business in February. “It’s certainly the consensus that these numbers are unreliable.”