• National accounts for the March quarter came in well below expectations, suggesting a more subdued economic recovery than previously thought. Real GDP growth eased to 7.7% yoy, from 7.9% last quarter. Consumption made the largest contribution to growth but it is too early to say an economic restructuring is underway.
• Partial economic indicators for March were once again mixed but tend to indicate a slowing down in the growth momentum. Year-ended growth in production slowed, including a noticeable easing in electricity production. Nominal retail sales picked up but are still relatively subdued. Exports accelerated, but there is some question over the meaning of the increase. Fixed investment has increased strongly, but risks from overcapacity have risen along with it.
• CPI inflation remains well within acceptable levels, which has reduced policy risk and given scope for authorities to react to slowing growth later in the year if necessary. We have pushed back our expectation for policy normalisation until early 2014.
• We have revised our forecast for China’s GDP growth down to 8% in 2013 (from 8¼%), but we maintain a downward bias for the outlook due to mounting downside risks.
• This month we have included a closer look at China’s commercial property markets. Risks of a bubble have risen in some second and third tier cities, but we do not expect a dramatic correction in the overall market in the near term.

For further analysis download the full report.

• China Economic Update – April 2013 (PDF 284KB)