China's Economy Beats Growth Forecasts: 5 ETFs In Focus

While speculations of a global economic slowdown are making the rounds, China has provided some respite to investors by beating first-quarter growth estimates. Despite odds like weak global demand, trade tensions with the United States and debt-related issues, the Chinese economy expanded 6.4% in the quarter, surpassing economists’ forecasts of a 6.3% rise. However, first-quarter GDP was in line with the fourth-quarter 2018 number.

Rejoicing on the news, investors chose to grab the Australian dollar, which is considered the liquid proxy for China plays. As a result, Australian dollar rose 0.3% to a two-month high of $0.7206.

Factors Behind the Impressive Numbers

Analysts believe that policymakers in China have done a good job in supporting the economy. China’s economy witnessed a rise in bank loans and total outstanding credit. Fresh credit was released in the economy and the reserves required to be kept at banks were lowered. Moreover, the government supported the economy by increasing investments made by state-owned firms to 6.7%. Additionally, recently released credit report data reflected a 10.7% rise in outstanding total social financing in March.

The restrictions on housing transactions and mortgages for the past two years have also been relaxed. A minimum of 50 cities are speculated to have relaxed the restrictions on residency permits this year. The move intended to provide some support to the local real estate markets. In fact, there was a 10.6% rise in average of the housing prices in 70 big Chinese cities in March. This also happens to be the fastest gain since April 2017.

The Chinese policy makers are also aggressively working on their taxation policies. Last month, the Chinese government announced plans to implement $298 billion deductions in taxes and company fees. It announced a cut in the value-added tax (VAT) for the manufacturing sector to 13% from 16%, and VAT for the transport and construction sectors to 9% from 10%.

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