Balancing growth with structural reform

After a disappointing performance in 2018, China's economy appears to be stabilizing. In the first quarter of 2019, GDP growth, at 6.4 percent year-on-year, matched that of the previous quarter. But growth in industrial production exceeded expectations, expanding by 6.5 percent year-on-year (and by 8.5 percent in March). Even exports growth was positive, albeit weak, despite the ongoing trade frictions with the United States.

Moreover, fixed-asset investment (FAI) grew by 6.3 percent - 0.2 percentage points higher than in the previous quarter. Investment in real estate grew the fastest (11.8 percent), followed by manufacturing (4.6 percent) and infrastructure (4.4 percent). The growth of investment both in real estate and infrastructure was stronger not only sequentially, but also year-on-year. As usual, consumption growth was stable.

All of this has inspired confidence that the Chinese economy can reach its indicative growth target of 6-6.5 percent in 2019.