• China’s economy grew by 6.4% in the year to March, faster than the 6.3% level expected by economists.
• Monthly readings on retail sales, industrial output and fixed asset investment in urban areas all improved from the first two months of the year.
• Annual growth in industrial output surged to the highest level in nearly five years.
• Chinese policymakers have rolled out tax cuts and freed up cash for banks to lend in order support economic activity after a slowdown late last year. The latest data suggests those stimulus measures working.

China’s economy bucked expectations for a slowdown in the March quarter, expanding by 6.4% from a year earlier, according the National Bureau of Statistics (NBS).

The result beat the 6.3% increase expected by economists, continuing the curious knack of the NBS growth figure either meeting or exceeding forecasts seen regularly in recent years.

The annual GDP rate was unchanged from the level reported in the December quarter last year.

In the March quarter, the NBS said the economy grew by 1.4% after seasonal adjustments, down slightly from the 1.5% pace seen in the final three months of last year.

In a clear sign that attempts from the government to stimulate activity levels are working, retail sales and industrial output both topped expectations in March, hinting the economy is rebounding quite sharply after a slowdown earlier in the year.

The NBS said retail sales grew by 8.7% from a year earlier, above the 8.4% level expected by markets and 8.2% increase seen in February. It was the fastest annual increase since September last year.

Industrial output also surged, increasing by 8.5% from a year earlier, the fastest annual increase since mid-2014. That was up from 5.3% in the year to February and breezed past forecasts for a smaller lift of 5.9%.

Urban fixed asset investment also accelerated, increasing by 6.3% between January and March compared to the same period a year earlier. While in line with market expectations, the increase was faster than the 6.1% annual increase reported in the first two months of the year.

According to Reuters, real estate investment rose 11.8% in the first three months compared to the same period a year earlier, lifting slightly from the 11.6 percent annual gain reported between January and February this year.

The latest data adds to growling list of economic indicators such as new bank lending, PMI reports and export growth that suggest recent attempts from policymakers to stabilise activity levels are working.

“China’s high frequency economic indicators [such as money supply and producer price inflation] confirm that growth is bottoming out,” said ANZ Bank’s China economics team.

“With Q1 GDP registering 6.4%, we now revise our GDP forecast to 6.4% for full-year 2019, from 6.3% previously.”

The Chinese government is targeting GDP growth of between 6% to 6.5% in 2019. The Q1 GDP report and March activity indicators suggest it’s already well on track to achieve that goal, casting doubt over the need for policymakers to stimulate growth further in the quarters ahead

“As the growth momentum of the Chinese economy picks up, we believe that policymakers will re-assess the need for further stimulus,” ANZ said.

“Consequently, the likelihood of a cut in the reserve requirement ratio [from the People’s Bank of China] in the June quarter has decreased.”

China’s economy grew by 6.6% in 2018, the slowest level in nearly three decades. The moderation was driven by increased trade tensions with the United States, along with a push from policymakers to encourage deleveraging across its industrial sectors. China’s economy is also far larger than in previous decades, further contributing to the slowdown in GDP growth thanks to a higher base effect.

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