China’s economy resumed in March, with growth nudging down to 5.1% after several months of more stable readings. Its weakest rate since late 2016, the measure is now some way below the 6.4% official estimate of annual GDP growth, which defied market expectations of a further slowdown in the first quarter. The CMI not only points to weaker economic growth but also to changes in the composition of that growth, a consequence of China’s stop-start approach to reform. For now, it continues to suggest that China is prioritising growth over reform, with the bulk of ‘old-model’ sub-components included within CMI 2.0 firming in March. This strategy has seen China loosen several key rates harder and faster than at any point in recent history, and has helped to avert a repeat of 2014-15. Beijing is caught between a rock and a hard place as both the old and new growth strategies are fraught with difficulties: the former is producing less bang for its buck, while the latter is associated with a painful economic adjustment.
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