How China shored up economic growth

Jul 16, 2014

After months of gloomy figures, Chinese growth is accelerating again – slightly

Ed Jones/AFP/Getty Images

China's economic growth has accelerated for the first time in three quarters following Beijing's decision to ramp-up stimulus measures and push the country towards higher levels of domestic consumption.

According to China's National Bureau of Statistics, gross domestic product grew by 7.5 per cent compared with the same period last year, up 0.1 per cent from the previous quarter.

The small rise puts the world's second largest economy back on track to reach its annual growth target despite a slowdown at the start of the year.

The latest GDP figures indicate that Beijing is "having some success" with its new fiscal policy of accelerated spending, tax cuts and credit-easing, says the Wall Street Journal.

JP Morgan's chief China economist Zhu Haibin said: "Overall, the message is significant recovery in the second quarter and the good news is the economy seems to be bottoming out".

President Li Keqiang's government responded to the slowdown with a raft of stimulus measures designed to offset declining export rates, slower foreign investment and a faltering real-estate market.

The country's leaders are now trying to "steer China towards growth based on domestic consumption rather than trade and investment", AP says. Beijing is spending heavily on the construction of railways and other public works in the hope this type of stimulus will promote future growth.

Reuters says that this government intervention is likely to fuel continued expansion until the end of the year, but cautions that this kind of growth should not be mistaken for a "natural upturn in momentum".

Asian markets responded modestly to the news, with indexes in Shanghai and Hong Kong rallying to the data release.

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