BEIJING – China's economy stabilized in the first three months of the year, according to official figures released on Wednesday, after Beijing flooded the financial system with money in an whatever-it-taking approach to arresting a slowdown.
Officials said the Chinese economy, the world's second largest, grew 6.4 percent in the first quarter of the year compared to the same period in 2018. The pace was the same as in the fourth quarter, as growth suffered as buyers paired back, the stock market was random and private businesses used for help.
While economists generally look at China's economic figures with skepticism, they point to other signs that the country's current slowdown may have reached its bottom. Other figures suggest that consumers are back on the till, factory production is picking up and the world, after several tough months, is buying more Chinese goods. Beijing needs such hopeful signs as it attempts to reach a trade agreement with the Trump administration while under pressure to raise the conditions at home.
There is a warning: The signs of improvement probably do not come from a Sudden outbreak of the strength of the nation's economy among Chinese business leaders
Instead, the positive mica is largely a product of the hundreds of billions of dollars that Beijing has pumped into its economy over the past few months, and the loans that officials have pushed state banks to All this comes at a price and it raises a question of how willing Beijing will use to keep the growth going.
"This time, they used an overwhelming amount of power to boost the economy," Larry Hu said. in China at Macquarie Group, said. "That is why the economy stabilized in the first quarter."
The possibility of a "double dip", where growth is falling again before picking up down this year, is high, Hu said. "The recovery is not so solid," he said. "They defended the gun at the beginning of the year."
In many ways, China's political decision-makers go back to an earlier approach: distributing multiple loans in exchange for a short-term increase in confidence. The strategy helped keep growth up over the past decade, even after the global financial crisis in 2008. But it left the country confusing in debt that threatens to hamper the economy for years to come.
In the early years of China's boom, companies and local governments could borrow liberally to know that accelerating growth could help ensure that their gamblers paid off. Now that the country's economy is big and mature, it has become increasingly difficult for China to simply grow its way out of its debt.
"China is already in the middle of the largest credit bubble the world has ever seen," said Victor Shih, a lecturer at the University of California, San Diego. And Professor Shih added, the Chinese government has not been able to deviate from its debt habits.
"The government simply cannot afford to think in the medium term and must focus on the short-term continuation of the credit bubble" He said.
The last round of state-run financial grandeur was remarkable in size and scale, economists said.
The broadest target for new borrowing in China, known as total social funding, jumped to $ 1.2 trillion in the first quarter, while bank lending hit record highs of $ 865 billion, according to Mr. Hu at Macquarie Group.
Local government encouraged by the state increased $ 100 billion in new money through special bonds, compared to just $ 11.5 billion in the first quarter last year, when the same local government was hidden to borrow too much and hid its debts.
This money began to appear in the financial data on Wednesday, with spending on massive infrastructure Projects such as customs roads and new metro lines are increasing by 6.3 percent.
On Tuesday, the Organization for Economic Cooperation and Development warned of the potential dangers of such a heavy borrowing, and said it could provide greater economic imbalances in the future. The organization revised the outlook for China's growth to 6.2 percent this year and 6 percent for 2020, citing increased housing collapse risks and growing geopolitical tensions.
Even though it is struggling through an economic downturn, China is a "major driver of world economic growth," said Ludger Schuknecht, the organization's deputy secretary, in a report. external challenges to maintain its strong position in the long term "Schuknecht said. The organization also warns that the country's trade war with the United States will weigh on exports and general growth.
As it seeks engines to drive global growth, the world needs China to pull Last year, Beijing reported that growth was softened to its slower pace since 1990, among other things by the evidence that the trade war was already beginning to take a twelve spooking investors.New export orders fell to multi-year downs and the factories were cut to cut overtime and send workers home early before the Chinese holiday season.
The world can again turn to Chinese customers if The quarters in the quarter are some indication. Chinese buyers helped push retailers by 8.3 percent in the first three months of the year, even though car sales were still low and the figure was unimpressive over the past few years.
"Early signs that consumer growth may be stabilization is really the great story," said Shaun Roache, Asia Pacific chief economist at S & P Global.
Businesses seemed to have more resources to hire and expand in the first three of the year Part of this was the result of a promise by last year by the central bank to pump $ 175 billion into the system, mostly to help small and medium-sized businesses.
Although the data is still weak For manufacturers, the sector saw a double-digit jump in revenue in the first three months of this year compared to the last quarter of 2018, according to the financial consulting firm China Beige Book.
Making Deep Cuts to Corporate Tax is among the new Beijing Guidelines will stimulate economic activity. The State Council, China's Cabinet, has announced a series of such cuts, which are expected to release $ 300 billion to help launch the economy.  If today's measures don't work, Beijing may try several unconventional policies to encourage the struggle of sectors such as the real estate market.
This sector, which by some measures accounts for up to 30 percent of China's economic activity, is put together with too many unsold apartments and many unfinished development projects. The decline in real estate sales and glut of empty apartments – 65 million units, according to an estimate – has begun to worry economists. New housing starts this year are down from the same period last year. Land sales also fell in the first quarter and may continue to fall.
Chinese officials have said they have a handle on what they see as a modest decline. Economists say the government still needs to get the debt problem under control.
"This collection did not come out of nowhere," analysts in China Beige Book wrote, "and there are at least three reasons to doubt that they live power: credit, credit, and credit."