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Economic growth stabilizes and exceeds market expectations

Apr. 22, 2019

The market generally reflects that China's economy grew by 6.4% in the first quarter, showing more than expected growth resilience.


From the perspective of structure, in terms of production, the growth rate of industrial value above designated size in the first quarter was 6.5%, an increase of 0.8 percentage points over the fourth quarter of the previous year. In terms of consumption, the cumulative growth rate of total retail sales of consumer goods from January to March was 8.3%, which was 0.1 percentage points higher than the cumulative growth rate in January-February. In terms of investment, in the first quarter of 2019, fixed asset investment grew at a rate of 6.3% year-on-year, an increase of 0.4 percentage points over the previous year.


Mao Shengyong said that in the first quarter of this year, the troika, consumption, investment, and external demand performed better to varying degrees. However, the contribution rate of the "troika" is a trade-off. The trade surplus of goods in the first quarter of this year increased by 75.2% over the same period of the previous year, reflecting that the contribution rate of net exports is rising in the three major demand, and the net of goods and services is rising. The export contribution rate rose to 22.8%. At the same time, despite the acceleration of investment and the accumulation of capital, the contribution rate of total capital formation was 12.1%, which was 28.3 percentage points lower than the same period of the previous year. In addition, from the perspective of absolute share, the consumption contribution rate exceeds 60%, which is still the most important force driving the economy.


Since the economic data from January to February is not particularly ideal, the market has not expected high economic growth in the first quarter. Mao Shengyong said, but the March data is really good, it can be said that it is more beautiful, and some indicators are more obvious.


For example, in March, the added value of industrial enterprises above designated size increased by 8.5% year-on-year, 3.2 percentage points faster than January and February, and 1.0% quarter-on-quarter; investment rebounded slightly; consumption also increased slightly; imports and exports, especially in March, rose in the month. More than 20%, significantly better than expected.


Mao Shengyong pointed out that the improvement of these indicators is due to the cumulative effect of policy effects, market confidence, significant improvement in corporate expectations, and the impact of the Spring Festival. Taking industrial indicators as an example, under the influence of policy factors, the production enthusiasm of enterprises is increasing, and enterprises are expected to improve. At the same time, from April 1st, the manufacturing value-added tax rate has dropped from 16% to 13%. Many enterprises have taken the initiative to increase the stocking in order to expand the tax deduction, and objectively require upstream enterprises to increase production. In addition, part of the reason is the influence of the Spring Festival misplacement factor. The growth rate of industrial enterprises on the 1st to 2nd month is 5.3%. If the influence of the Spring Festival factor is removed from January to February, the growth rate of industrial enterprises from January to February is 6.1%. In March, the added value of industrial enterprises above designated size increased by 8.5% year-on-year, and there was also a part of the impact of the Spring Festival factor.


Li Qilin, chief economist of Lianxun Securities, said that if you look at the March data alone, production and demand indicators are strong. In particular, the growth rate of 8.5% in industrial added value makes people exclaim that production is too strong. How to understand the strength of production, Li Qilin believes that in addition to the factors of the Spring Festival and the downward adjustment of the manufacturing value-added tax rate, the demand for the real estate industry chain is strong, and the growth rate of industrial products such as crude steel and coke, which are greatly affected by the policy, is rising in April. It is the reason behind the rebound in industrial added value.


In the first quarter, the year-on-year growth rate of high-tech manufacturing investment was 6.8 percentage points higher than that of the manufacturing industry. The growth rate of investment in high-tech service industry was 11.8 percentage points higher than that of the tertiary industry. The Guojun Macro Flower Changchun team pointed out that from the industry point of view, the industrial value-added growth rate of the downstream equipment, automobile and computing industries was the most significant.


Cheng Shi, chief economist and managing director of ICBC International, said that this shows that the high-end development of manufacturing and service industries is growing.


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