Analysts expected China’s economic growth to decline in Q1 2019 but reports out on Wednesday defied expectations and showed a steady 6.4 percent growth from Q1 2018. Expectations had been for a 6.3 percent growth, which would have been the slowest growth in China in 27 years. Consumer demands hinted towards improvement in the country’s economy and industrial production increased significantly. Construction materials also posted positive gains. Other data released on Wednesday showed that retail sales for March grew by 8.7 percent, surpassing projections for an 8.4 percent growth.
Despite the positive surprises, the data, strong as it was, failed to cause a rally in Chinese indexes. As of 12:51 p.m. HK/SIN, the Shanghai Composite was trading flat and the Shenzhen Composite was up 0.23 percent. Traders throughout Asia remained cautious that the Chinese data does not provide the full picture, and that weakness may still be expected ahead.
Beijing has increased its economic stimulus program this year to boost economic growth, providing new tax cuts in the billions of dollars, and increasing infrastructure spending. Chinese banks lent a record 5.8 trillion yuan ($865 billion) according to Reuters, in 1, a number that surpasses the GDP of Switzerland. J.P. Morgan Asset Management told CNBC that Beijing may curb its stimulus program to avoid accumulating debt again, a projection which could introduce additional concerns into the market.
Asian indexes were trading mixed in the early afternoon on Wednesday. Japan’s Nikkei 225 was up 0.29 percent but Hong Kong’s Hang Seng Index was down 0.22 percent. Australia’s ASX 200 was also down, falling 0.17 percent. South Korea’s Kospi was flat.