China Economic Quarterly Q1 2019

The 6.4% growth rate of GDP in Q1 is better than the market expectation, and within the new official target range of 6% to 6.5%.

The China Economic Quarterly is a market outlook prepared by PwC China and Hong Kong on a quarterly basis to share the latest economic and policy updates. This issue provides an overview of the macroeconomic trends in Q1 2019, some policy updates and hot topic analysis.


Here are some highlights of the macro economic and policy updates: 

  • GDP increased by 21.34 trillion yuan (equivalent to total GDP for the year 2005)
  • Total fixed asset investment reached 10.19 trillion yuan, expanding by 6.3% 
  • Sources of funds were slightly better for property developers
  • PMI was still weak, but rebounded in March
  • Profits of industrial enterprises declined by 3.3% 
  • Total retail sales of consumer goods went up by 8.3% 
  • Imports and exports decreased by 1.5%  
  • PPI continued to fall and CPI was stable


Policy updates & hot topic analysis

China’s central bank substantially increased monetary support for the real economy

According to data from the People’s Bank of China, in the first quarter, aggregate financing to the real economy (AFRE) was 8.18 trillion yuan, and substantially went up 2.34 trillion yuan year-on-year. AFRE is the total volume of financing to the real economy, which includes flows of RMB loans, foreign currency-denominated loans, undiscounted bankers’ acceptances, net financing of corporate bonds, domestic equity financing by non-financial enterprises, net financing of local government special bonds etc. Compared to the 5.85 trillion yuan of AFRE in the first quarter of 2018, the growth rate is about 40%. 

China increased fiscal spending by 15% in the first quarter, much higher than the past year

In addition to stronger monetary measures to uphold economic growth, China’s Ministry of Finance also accelerated fiscal support by increasing spending to 5.86 trillion yuan, which includes 0.69 trillion and 5.17 trillion yuan for central and local general public budget expenditure respectively. The growth rate of fiscal spending was around 15%, or four percentage points higher than the same period in 2018. 

Will the world's largest manufacturer face a turning point?

In 2018, manufacturing of automobiles in China had negative growth of 4.2% for the first time since 1990. This is an issue because China has the largest automobile market (in terms of sales and production), the second largest economy, and is the world’s largest manufacturer. During the first quarter of this year, manufacturing of automobiles declined 10.4% again, meanwhile, the growth of industrial added values for companies over certain scales went up 6.5%, but during the first two months, profits of industrial added values for companies over certain scales dropped 14.0% and revenues only increased by 3.3%.  

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Thomas Leung

Managing Partner - Markets, PwC China

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Elton Huang

Managing Partner, Central China Markets Leader, Shanghai Office Lead Partner, Entrepreneurial and Private Business Co-Leader, PwC China

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Vice Chairman, PwC China

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G. Bin Zhao

Senior Economist, PwC China

Tel: +[86] (21) 2323 3681

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