VAT cuts and May Day holiday influenced China's April growth

The introduction of VAT cuts and a longer May Day holiday influenced China's economic performance in April, said Li Wei, a senior economist at Standard Chartered Bank.

“We think there are a couple of temporary factors which could have negatively affected April's growth,” the economist commented.

He cited that the introduction of VAT cuts, starting on April 1, led to a production boom in March and “subsequently a drag on the growth activities in April.” In the meantime, he considered the longer May Day holiday as the other factor affecting April's growth.

“We have increased numbers of working days in April, which to some extent has reduced the retail sales,” Li said.

As to the second half of the year, Li still bet on consumption as the major contributor to the Chinese economy.

“Consumption is the major driver of the Chinese economy today. If you break down the first quarter GDP, over 70 percent of Chinese economic growth came from consumption,” the economist told CGTN, adding that the recovery of the housing market could be another supporter for this year's economic growth.

(CGTN)