China's economy grows 7.4% in 2014 Q1, better than forecast

 
National People's Congress exterior Chinese leaders are pushing for reforms to boost growth at home

China's economy expanded by 7.4% in the first quarter of the year, better than what many were expecting.

But it is a slowdown from 7.7% growth in the final quarter of last year.

Other data released with the gross domestic product (GDP) figure showed industrial output rising 8.8% in March from one year ago.

Retail sales for the month of March spiked by 12.2%, underscoring China's efforts to boost economic growth via domestic consumption.

Last year China set its growth target for 2014 at 7.5%, part of efforts to stabilise the economy after years of fast-paced expansion.

China's growth data is closely watched around the region. A slowdown could hurt Asian economies especially those which export commodities and industrial components to the world's second largest economy.

Quality vs Quantity

China's Premier, Li Keqiang, is trying to downplay the fixation on GDP figures in the world's second largest economy. He's now stressing that the quality, rather than the quantity, of growth is what is important.

China's leaders have said they will tolerate slower growth while they push through major economic reforms which are designed to create new, better-paying jobs. There is the realisation that the old economic model, dependent upon investment-led growth and exports, has now run out of steam.

The leadership wants to see more domestic consumption to create more sustainable growth over the long-term. It wants the private sector to play a bigger role. But in any economic shake-up, there will be winners and losers.

Implementing the reforms will mean tackling entrenched economic interests - such as state-owned enterprises - that have gobbled up resources and done very well out of the old way of doing things.

In recent weeks, the government has announced a mini-stimulus to prop up flagging growth. But it has ruled out the type of the massive stimulus which jolted China's economy back to life following the global financial crisis.

Despite the challenges, the governments hopes to post growth of around 7.5% for this year.

A sluggish start for the year is not uncommon, due to the Lunar New Year holiday when many businesses and factories shut down operations for about two weeks.

But recent data from the manufacturing as well as industrial sectors have been weak, raising fears of a prolonged slowdown.

Economic boosters

Amid these concerns, China has recently taken more steps to give a jolt to its economy.

A mini-stimulus measure announced earlier this month will see Beijing extending a tax break for small and medium-sized companies, and ramping up spending on China's railway infrastructure.

In addition, the mainland also took steps to open up its capital markets by announcing a tie-up with Hong Kong, allowing for cross-border stock investment. The pilot scheme is scheduled to take off in about six months.

And in January, China launched a free-trade zone in Shanghai, seen as a test bed for reforms in key areas of the economy, such as the financial and telecom sectors which previously were tightly controlled by the government.

China also said it will allow foreign firms to make gaming consoles within the free-trade zone and sell them across China - lifting a ban on gaming consoles which had been in place since 2000.

Yuan counting China doubled the daily trading band for its currency this year to 2%
Bottoming out?

Analysts are hopeful that the Chinese economy has bottomed out, and will perform better later in the year.

Julian Evans-Pritchard from Capital Economics said: ``Chinese growth held up better than expected last quarter and there are signs that downwards pressure on growth has eased somewhat.''

Start Quote

It is an open question as to whether China can create the seven million jobs a year needed for its new graduates ”

End Quote

"While Q1 GDP growth slowed, we believe that the growth momentum has stabilised in March. Port throughput data and our field study also suggest that China's trade may have bottomed out, and will become more resilient than what the current headline numbers suggest," said Zhou Hao who covers the Chinese economy for ANZ in Shanghai.

China's trade figures for March had shown a sharp drop in both imports and exports.

Earlier this month the World Bank lowered its growth forecast for the Chinese economy this year to 7.6% for this year from a previous prediction of 7.7%.

 

More on This Story

Global Economy

Comments

This entry is now closed for comments

Jump to comments pagination
 
 

Page 1 of 8

 

More Business stories

RSS

BBC Business Live

  1.  
    TESCO 08:10:

    Tesco's share price is down again this morning, suggesting the arrival of new CFO Alan Stewart this morning may not be enough to satisfy investors. It has fallen 2.22% to 1.98p in the first few minutes of trading.

     
  2.  
    Tate & Lyle 08:06:

    Tate & Lyle has issued a profit warning this morning, blaming significant disruption to its supply chain and increased competition for its Splenda sucralose sweetener. Traders expect the company's shares to take a hit this morning.

     
  3.  
    TESCO 07:57: BBC Breakfast

    Steve Dresser from Grocery Insight tells Breakfast the biggest concern for Tesco investors is the possibility of more skeletons in the closet. "The real fear for the City is if they go further back in the accounts and realise this was an ongoing practice," he says.

     
  4.  
    TESCO 07:52:

    What will the market reaction be to Alan Stewart's early start as Tesco's finance director? Shares fell nearly 12% yesterday, wiping off more than £2bn from the value of the company. We'll find out what happens in about ten minutes when the market opens.

     
  5.  
    TOP STORIES
     
  6.  
    OIL PRICES 07:43: BBC Radio 4
    Oil pump jacks pump oil at Al-Jbessa oil field in Al-Shaddadeh town of Al-Hasaka governorate,

    Nick Butler, a former adviser to BP and a visiting professor at Kings College London, says the price of oil - already 15% lower this year - could fall to as low as $80 a barrel. He says Saudi Arabia could end up as one of the big losers. Saudi Arabia "will be squeezed" by other oil producing nations, he says. "They will be putting pressure on them to reduce production. Saudi Arabia could be forced to cut production to stabilise the price at perhaps $80, perhaps $85 a barrel."

     
  7.  
    TESCO Via Twitter Simon Jack Business correspondent, BBC News

    tweets: After uncomfortable moments yesterday when Dave lewis was asked he had a CFO or not, Alan Stewart starts today. M&S release him 2mth early.

     
  8.  
    TESCO 07:32: Kamal Ahmed BBC Business editor

    I am told that Alan Stewart's arrival came after a direct appeal from Dave Lewis to Marc Bolland who "graciously" allowed him to leave early.

     
  9.  
    MOTHERCARE 07:25:

    Mothercare has announced plans to raise about £100m from investors. The company's chairman, Alan Parker, says the rights issue is a "pivotal step" and hopes it will return Mothercare's UK business to profitability.

     
  10.  
    TESCO 07:23: Kamal Ahmed BBC Business editor

    The announcement that Alan Stewart is starting as Tesco's finance director today will bring some relief to investors. A business facing an accounting crisis with no chief financial officer was not exactly comfortable. Sir Richard Broadbent, the chairman, will hope that the move will quieten those who believe that he should consider his position.

     
  11.  
    TESCO 07:17: BBC Breakfast
    Breakfast

    Tesco's share price fell nearly 12% yesterday - that's £2.2bn off the value of the company. Kevin Doran from Brown Shipley tells Breakfast's Steph McGovern: "It's a significant fall because it's a permanent fall... this is a car crash happening in slow motion". He also says he would be "astonished" if this was the end of the bad news.

     
  12.  
    JIMMY CHOO STOCK MARKET FLOAT 07:15:
    A Jimmy Choo shoe

    Luxury shoes brand Jimmy Choo has confirmed its intention to float on the London Stock Exchange this morning. In a statement, chief executive Pierre Denis says the firm has "strong momentum" adding he is confident its future as a public company can only extend its reputation.

     
  13.  
    TESCO 07:13:

    Here's a link to that (very short) statement from Tesco on Alan Stewart's arrival. The supermarket faced criticism after yesterday's revelations that it would be effectively running without a CFO for the rest of the year, had Mr Stewart started in December as originally planned. Will investors react positively to this announcement at the start of trading?

     
  14.  
    TESCO 07:05: Breaking News

    Tesco has said this morning that its new chief financial officer Alan Stewart will join the company today. That's almost three months early.

     
  15.  
    SUGAR Via Twitter Adam Parsons Business Correspondent

    tweets: "Tate and Lyle: Disruption to supply chain in first half of the year has cost business £40m"

     
  16.  
    CHINA MANUFACTURING 07:03: BBC World News
    Rico Hizon

    Some apparently good economic news from China, according to World Business Report. Activity in manufacturing unexpectedly picked up in September according to the latest figures, even as factory employment slumped. Rico Hizon in Singapore tells the programme that it is a big relief for investors after a string of negative news out of China in recent weeks.

     
  17.  
    TESCO 06:59: BBC Radio 4

    Ms Palmer of Begbies Traynor tells Today when Laurie McIlwee resigned in April "it was allegedly due to some certain differences of opinion" between former chief executive Philip Clarke and Laurie McIlwee. "So it could well be that this issue goes that far back."

     
  18.  
    ROCKEFELLERS GO GREEN 06:49:
    Oil well

    The Rockefellers - the US industrial family that made a fortune out of oil in the late 19th century, is going to sell its investments in fossil fuels and reinvent itself in clean energy, according to US press reports. Rockefeller Brothers Fund, founded by the family heirs, has signed a pledge to get rid of fossil fuel assets.

     
  19.  
    TESCO 06:42: BBC Radio 4

    More from retail analyst Julie Palmer on Tesco. She says there has been "some concern over a period of time that the Tesco board just hasn't been strong enough". Tesco relies a lot on non-executive directors, she adds. It's also not clear how long former chief financial officer Laurie McIlwee has been absent from the company following his resignation in April.

     
  20.  
    TESCO 06:38: BBC Radio 4

    It looks like Tesco has "recognised the acceleration of payments from suppliers for in-store promotions and bonus payments, while deferring costs relating to food that is out of date and stock theft", Julie Palmer of Begbies Traynor tells Today (whatever this means). But she says it's not clear if they have broken accounting rules.

     
  21.  
    LISTEN AGAIN Via Twitter Adam Parsons Business Correspondent
  22.  
    LABOUR CONFERENCE 06:24: Radio 5 live

    British Chambers of Commerce boss John Longworth says Ed Balls' speech at the Labour party conference yesterday marked a "paradigm shift" in Labour's approach to business. He tells Wake Up to Money a slew of policy plans including cuts to business rates, infrastructure plans and a decision on Heathrow expansion are all good news. Suggestions that Labour is anti-business, he says, are "behind the curve".

     
  23.  
    RATES RISE? 06:18: Radio 5 live

    The Bank of England should raise interest rates straight away according to Jim O'Neill, the economist and former chairman of Goldman Sachs Asset Management. He tells Wake Up to Money: "there's no reason not to move right now", and more "conventional" rates will be appropriate for the recovering economy.

     
  24.  
    BARCLAYS FINE 06:10:
    A Barclays sign hangs outside a branch of the bank in the City of London

    Barclays Bank appears to have found itself in some regulatory hot water again according to the Financial Times. The paper reports the bank will later today be fined £38m for failing to keep client's money separate from its own at its investment arm. The fine, levied by the Financial Conduct Authority, would be a record for this type of misconduct.

     
  25.  
    TESCO IN SOUTH KOREA 06:03: Radio 5 live

    Tesco's troubles follow it to South Korea, the BBC's Steven Evans in Seoul tells Wake Up to Money. Regulators there have opened an investigation into Homeplus - a local Tesco subsidiary with 400 stores. Allegations include the selling of customer data, and the suggestion that a BMW car, meant as a customer lottery prize ended up in the hands of a friend of the staff - so not related to Tesco's current UK problems.

     
  26.  
    06:00: Edwin Lane Business reporter, BBC News

    There's also more on the Labour party conference, which continues today. Get in touch with us throughout the morning on bizlivepage@bbc.co.uk or on Twitter @BBCBusiness.

     
  27.  
    06:00: Matthew West Business Reporter

    Morning folks. This morning we have a trading update from Barclays bank as well as one from Punch Taverns. We also learned of 1,700 job losses at Phones 4U overnight. There are the latest set of public sector finances to examine later on. And there's bound to be more on Tesco's accounting irregularities. Stay with us.

     

Features

  • Image of Ankor Wat using lidarJungle Atlantis

    How lasers have revealed an ancient city beneath the forest


  • John Graham (right) and wife Susan held a press conference in Charlottesville, Virginia, on 21 September 2014Bet your life

    Do appeals for hostages' release help or hurt their chances?


  • Agents with the US Secret Service, such as this one, are responsible for guarding the presidentGuarding the guards

    White House break-in adds to Secret Service woes


  • Serhiy Hordiychuk fighting in eastern UkraineNew battle

    Ukraine's wounded forced to fight for artificial limbs


From BBC Capital

Programmes

  • TokyoThe Travel Show Watch

    Japan has a reputation for being expensive but can you visit without breaking the bank?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.