China's economy grew 6.8 per cent in the first quarter of 2018, slightly faster than expected, buoyed by strong consumer demand and surprisingly robust property investment despite continued measures to tame rising home prices.
Analysts polled by Reuters had expected gross domestic product (GDP) to expand 6.7 per cent in the January-March quarter, slowing only marginally from 6.8 per cent growth in the previous two quarters.
Beijing is looking to keep the economic balancing act intact even as it faces rising trade tensions with its largest trading partner, the United States, that could impact billions of dollars in cross-border trade.
"Consumption is really strong, there is strong wage growth in urban areas. We underestimated the power of consumption in China," said Iris Pang, Greater China economist at ING in Hong Kong
"Property investment is actually rising so I would not conclude the property segment is derailing the economy," she added, referring to the consensus view that the sector is starting to cool under the weight of rising mortgage rates and measures to curb speculation.
Investment in real estate, a crucial driver of the economy, accelerated to 10.4 per cent in the first quarter -- the fastest pace in three years. That compared with a 9.1 per cent expansion in the same period in 2017.
March retail sales rose 10.1 per cent from a year earlier, the strongest pace in four months, with consumers buying more of almost everything from cosmetics and clothing to furniture and home appliances.
Growth remained comfortably above the government's target of around 6.5 per cent for the full year, which could give policymakers more confidence to step up efforts to reduce risks in the financial system and clean up the environment.
Overall Jan-March fixed-asset investment growth slowed to 7.5 per cent, just below expectations.
Industrial output was perhaps the biggest downside surprise, expanding 6.0 per cent in March on-year, the slowest pace in seven months.
Analysts had predicted industrial output growth would cool to 6.2 per cent from 7.2 per cent in the first two months of the year.
