Data Release: Chinese GDP

by Sergio Mariaca on Apr 15, 2016 11:56:40 AM |Share:

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Chinese economic growth slows in the first quarter, in line with consensus

  • Chinese first quarter real gross domestic product (GDP) rose by 6.7% (year-on-year), matching the consensus expectation. (First quarter growth on a quarter-over-quarter basis should be released later this month, possibly as soon as next week).
  • In other data released, fixed asset investment growth slowed further through the first two months of this year before ticking up in March. Both February and March showed a sharp uptick in year-over-year growth in public infrastructure spending, consistent with the total social financing data. Fixed asset investment (excluding rural areas) rose by 10.7% (reported on a year-over-year in year-to-date basis), above the consensus for 10.4%.
  • The services sector continued to show signs of resilience, with nominal retail sales growth for March recorded at 10.5% (y/y), a bit stronger than the consensus forecast of 10.4%. Nonetheless, given the usual distortions around the lunar New Year, we're a bit cautious about what this implies about growth this quarter.
  • Industrial production rose 6.8% (y/y) in March, stronger than consensus call for 5.9%. Notably, growth in the mining sector staged a bit of a comeback after slowing down substantially through the end of 2015.
  • Consistent with an uptick in consumer prices last quarter, nominal GDP for the first quarter of 2016 rose 7.1% (y/y), slightly above real GDP growth of 6.7%. Higher commodity prices this year will likely result in the reversal of the contractionary trend observed in the Chinese GDP deflator for much of 2015.

Key Implications

  • This release should assuage some of the uncertainty surrounding Chinese growth for the first half of 2016. If growth continues to track above 6.5%, Chinese authorities will be on pace to meet their target growth for 2016 set within the 6.5% - 7.0% range.
  • The data remains in alignment to our view that economic growth will continue to decelerate in 2016, as authorities act to implement changes that gear economic activity toward domestic consumption and services and away from the "old world" economy of industrial production. However, this data acts to put some upside risk on our 2016 forecast of Chinese growth of about 6.3%.
  • We continue to anticipate that quarterly GDP growth in the first half of 2016 will be buoyed by infrastructure spending, ensuring that the economy will not underperform the implicit growth target of Chinese authorities. This stimulus will be targeted at local government infrastructure. As a result, fixed asset investment growth should remain somewhat resilient in the first half of this year, especially now that Chinese authorities are encouraging increased residential investment to help curb rising house prices.
  • Still, we anticipate ongoing turbulence in Chinese financial markets this year as authorities struggle to manage the precarious task of rebalancing the economy without heightening financial stability risks. This is further complicated by the explicit goal of Chinese authorities to reduce excess capacity, with signs of production slowdowns in some overcapacity industries such as ferrous metal mining showing up in the data already in the first quarter.

TD-1.jpgFotios Raptis, Senior Economist



This report is provided by TD Economics.  It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes.  The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.  The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs.  The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete.  This report contains economic analysis and views, including about future economic and financial markets performance.  These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties.  The actual outcome may be materially different.  The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.


Special Report: China's Commodity Demand Set to Rise

by Sergio Mariaca on Mar 4, 2016 10:00:00 AM |Share:

economic growth data release TD Economics china



  • Fears of slowing growth in China and the fizzling out of demand from one of the world’s largest consumers
    has weighed on commodity prices in recent months. In our view, these concerns appear to
    be overblown, as the long-term outlook for China and its commodity demand is still favourable.
  • While there are worries that the transition of the economy away from investment-led growth towards
    consumption-led growth will dampen commodity demand, the experience from other emerging markets
    reveals that this evolution tends to be gradual. Indeed, China still has a long way to go in terms
    of infrastructure development, so significant capital outlays – and commodity consumption – will be
  • Moreover, despite decelerating in percentage terms, growth in commodity demand in China will be
    occurring off a larger base. Hence, in volume terms, consumption gains for some commodities,
    including copper, zinc and oil, are on track to surpass those recorded over the past ten years.
  • What’s more, even if the Chinese economy endures a harder landing than we are forecasting, the
    story will not change as much as some expect, with commodity consumption still likely grow over
    the longer term.

Click here to read the full TD Economics report




An Update on China

by Sergio Mariaca on Feb 8, 2016 9:30:00 AM |Share:

financial markets international china

Hong_Kong_Exchange_Trade_Lobby_2007.jpgIn January, news articles about China appeared almost daily, speculating on the market volatility, the currency, government attempts to intervene in both, and the possible impact that China’s woes could have on the rest of the world’s markets and economies. Here, we have a brief review of the Chinese Equity market, courtesy of Dimensional.


Click here to view the full Dimensional report






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