So China’s growth looks good, but now what?
China’s first-quarter GDP growth – expected to be as much as 6.8 per cent – will help to quell hard landing fears, but fundamental questions remain about its sustainability
The blast furnace of bankrupted private Chinese steel maker Haixin Group has been quiet for two years, but next month it will start to guzzle iron ore and churn out steel once more as its new owner, Jianlong Group, sees a chance for business.
Steel prices have been rising across China and many steel mills are again seeing profits, despite a general overcapacity, as Beijing rolls out stimulus measures to arrest the slowdown.
Blessed by government-led infrastructure spending and a revival in property development, China’s headline GDP growth is looking good for the first quarter of 2016.
Policymakers are showing signs of relief, even though concerns remain over whether Beijing is just lengthening the fuse on a debt bomb or undermining the sustainability of growth by putting de-leveraging and capacity reduction on the back burner.
“Fears about a China hard landing should be over, instead, a small V-turn or U-turn in growth is expected,” said Chen Xingdong, the chief China economist with BNP Paribas in Beijing.
“But it is an old path of growth. China is on the old path again because it can’t find a new one.