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 That's good news in the near-term, economists say, but many worry
it marks a return to the old playbook used during the financial
crisis, when Beijing hand-cranked its economy out of a slowdown
through massive stimulus, rather than structural reform.
Official data on Friday showed China's gross domestic product grew
at an annual rate of 6.7 percent in the first quarter of the year,
easing slightly from 6.8 percent in the fourth quarter as expected.
However, other indicators released showed new loans, retail sales,
industrial output and fixed asset investment were all better than
forecast.
While analysts say the data is evidence of a bottoming out in the
economy's slowdown, some warn that the first quarter of 2015 got off
to a similarly glowing start before a stock market crash later that
year.
"What this shows is a stabilisation of the old economy," said
Raymond Yeung of ANZ, pointing to recovery in industrial production
and fixed asset investment.
 "I would still be a bit cautious about headline growth... last
year's 6.9 percent figure was underpinned by a massive contribution
from financial services, and the strong loan and credit growth
recently and the recent resumption of IPO activity suggests this
could still be a big contribution."
The National Bureau of Statistics said in a press conference in
Beijing on Friday that while main economic indicators showed
positive changes, "downward pressure cannot be underestimated."
It did not distribute quarterly GDP figures as it has in the past,
saying it needed more time to calculate the figure.
Global financial markets took the data in stride, but domestic
stocks fell slightly, as analysts said the strong data implied the
likelihood of a slower pace of monetary easing.
The CSI300 index <.CSI300> of the largest listed firms in Shanghai
and Shenzhen closed 0.1 percent lower. [.SS]
Forex markets were largely flat with the offshore rate <CNH=D3> and
the onshore rate <CNY=CFXS> trading around 6.5 per dollar.
RECOVERING DEMAND
Beijing hopes a recovery - even a credit-fueled one - can be
sustained to avoid the need for more aggressive stimulus that could
reinflate asset bubbles and make it more difficult to retrain
Chinese firms to move up the value chain.
Chinese banks extended 1.37 trillion yuan ($211.23 billion) in net
new yuan loans in March, nearly double the previous month's lending
of 726.6 billion yuan, suggesting renewed appetite for investment
among wary Chinese corporates.
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China's retail sales growth quickened to 10.5 percent in March from
10.2 percent, slightly above forecasts, while fixed-asset investment
growth rose to 10.7 percent year-on-year in the first quarter from
10.2 percent, beating market expectations of 10.3 percent.
Industrial output growth leapt up to 6.8 percent from 5.4 percent,
surprising analysts who expected a rise of 5.9 percent on an annual
basis.
The NBS also noted that official unemployment remained low in March,
around 5.2 percent, despite moves to cut capacity in bloated
industries like coal and steel.
Critics, however, point out that many laid-off workers from
old-economy sectors have been shifted into lower-paying government
jobs, cleaning up offices - good for political stability but bad for
wage growth and consumer spending.
At the same time official retail spending figures capture a lot of
government purchases; elsewhere in the economy there are signs that
ordinary consumption remains weak.
March export figures released earlier this week also staged an
unexpected recovery, although some economists caution that seasonal
effects from last year's late Lunar New Year holiday could be a
factor.
"Today's released data ought not to distract from the fact that the
structural issues facing China's economy remain unresolved," wrote
Economist Intelligence Unit economist Tom Rafferty in a research
note.
"It has taken considerable monetary and fiscal policy loosening to
stabilise economic growth at this level and this effort has
distracted from the reform agenda that is fundamental to long-term
economic sustainability."
(Additional reporting by Jessica Macy Yu, and by Samuel Shen and
Nathaniel Taplin in SHANGHAI; Writing by Pete Sweeney; Editing by
Sam Holmes)
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