China’s economy grows 6.9% in first quarter of 2017: govt

China's economy grew 6.9 percent in the first quarter of 2017, government data showed Monday, beating expectations in the latest sign of stabilisation for the world's second-largest economy.

Beijing has said it wants to transition away from a reliance on debt-fuelled investment and towards a consumer-driven economic model, but the transition has proved bumpy.

The economy grew at just 6.7 percent in 2016, its slowest rate in a quarter of a century.

"For the first time in the recent years, China starts a year with a strong headline GDP," Raymond Yeung of Australia & New Zealand Banking Group told Bloomberg News.

"Thanks to strong investment and property, the economy is performing well."

The reading Monday marked the second quarterly improvement since the final three months of 2014.

It was better than the median analyst expectation of 6.8 percent in an AFP poll, and also up on the fourth quarter figure.

"The national economy in the first quarter has maintained the momentum of steady and sound development," the National Bureau of Statistics said in a statement.

It added that "positive changes kept emerging and major indicators performed better than expected".

Monday's data also showed China's industrial output growth rose to 7.6 percent year-on-year in March, beating a Bloomberg estimate of 6.3.

Retail spending rebounded to a forecast-beating 10.9 percent, while fixed-asset investment rose 9.2 percent in the first three months of the year, representing a slight acceleration from February.

The readings follow data showing robust foreign trade and a further expansion in factory activity driven by a pickup in production and demand last month.

- 'Same old' growth model -

The faster growth rate was driven by a pick-up in industry and construction, Brian Jackson of IHS Global Insight said in a note, adding that "mining, manufacturing and utilities growth all accelerated", while the services sector slowed.

But the return to stimulus spending and infrastructure to drive the economy shows Beijing has reverted to "the same old" investment-driven growth model, Raymond Yeung and David Qu of ANZ Research wrote in a note.

They said the government's announcement last month that it would build a vast new economic zone in the relatively unprosperous area of Xiong'an shows authorities have a "tendency to rely on infrastructure development to sustain growth".

News of the Xiong'an zone, which is expected to eventually cover a vast area of some 2,000 square kilometres, set off a flurry of speculative real-estate purchases in the area, which has been struggling economically.

Cheap credit has meanwhile bolstered the construction sector since last year, attracting savers and speculators who have fuelled housing prices in large cities and accelerated manufacturing activity.

But looking ahead, China's growth momentum is not expected to last through the whole year, Julian Evans-Pritchard of Capital Economics said in a note.

"Our own measure of economic activity also points to a strong start to 2017, though we don't expect the strength to be sustained," he said.

"With the acceleration in credit growth that helped drive the recent recovery now being reversed, we still expect the economy to begin slowing before long."

Jackson said that a steady deceleration in the real estate sector should take hold from the second quarter, adding that it would "create an additional drag for both the services and construction components of GDP".

The government has trimmed its 2017 GDP growth target to "around 6.5 percent".

According to the AFP poll's median full-year forecast, China's GDP growth will fall to 6.6 percent for the year.

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China firm scraps deal to buy Southampton stake

China stadium builder Lander Sports Development said Monday it had scrapped plans to buy a stake in English football club Southampton, blaming unspecified "policy" changes amid a Chinese government clampdown on overseas investments.

The acquisition would have made Southampton, currently ninth in the Premier League, the latest top-flight English club to gain Chinese investment.

In a statement, Lander Sports implied it was having difficulties completing necessary procedures for the investments, including a corresponding asset restructuring at Lander Sports.

"Based on the principle of prudence, the company has decided to terminate this major asset restructuring in order to maintain normal development of the firm?s business and safeguard the interest of all investors," said the statement.

The statement was submitted to the stock market in the southern Chinese city of Shenzhen, where Lander Sports is listed.

Lander Sports' shares, which were suspended since October as talks with Southampton were under way, resumed trading Monday and tumbled the maximum 10 percent allowed by Chinese stock regulators.

Based in eastern China?s Zhejiang province, the company said it had signed an agreement in November with club owner Katharina Liebherr for a stake in St Mary's Football Group,Southampton FC's holding company.

It gave no details, but talks over a reported £200 million ($250 million) investment had been ongoing for months.

Premier League Manchester City and West Bromwich Albion have received investment from China, while second-tier Aston Villa and Wolverhampton Wanderers have Chinese owners.

Chinese enterprises also have taken significant stakes in clubs in Italy, Spain and elsewhere, after the government in recent years encouraged companies to make overseas investments.

But it has sharply reversed course lately amid concerns over capital flight, a slumping Chinese currency, and slowing economic growth at home.

The government began last year to roll out new restrictions to curb the outflow of money into "irrational" investments.

As a result, outbound investment has plunged so far this year.

A $1 billion bid by China's Wanda Group to buy the US operator of the Golden Globe awards was aborted, the US firm's parent said last year, amid reports that the Chinese investment clampdown was to blame.

However, the clampdown did not prevent Serie A giants AC Milan being sold to Rossoneri Sport Investment Lux last week in a deal which saw the Chinese-led consortium take a 99.9 percent stake in the famous Italian club.

Under football fan president Xi Jinping, China has ambitions of hosting the World Cup and the country's top companies and richest entrepreneurs have rushed to pick up stakes in foreign clubs and buy foreign players for huge wages.

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