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  • Things are looking up for China.

  • The world's second-largest economy expanded by 6.4 percent in the first three months of the year.

  • Just a little bit higher than economists' expectations of 6.3 percent.

  • So what does this mean for China?

  • For one, it shows that concerns over a trade war with America are fading.

  • President Donald Trump backpedaled last month on vows to ramp up tariffs on Chinese goods.

  • And the two countries are aiming to wrap up talks within a month.

  • On the domestic front, the rosy gross domestic product numbers demonstrate that a stimulus plan is kicking into gear.

  • China usually waits until March to allocate local government bond quotas.

  • This year, Beijing made sure that local governments were raising debt as early as January, in order to spend on infrastructure projects.

  • To show they're serious about spending, local leaders raised Rmb 1.2 trillion.

  • That's about $179 billion in the first quarter.

  • In the same period in 2017 and 2018, they didn't raise anything.

  • There's also a Rmb 2 trillion tax cut coming down the line.

  • Economists are mixed on whether the taxes will have a meaningful impact this year.

  • Are there risks?

  • Absolutely.

  • The biggest is an unwanted surprise on trade talks with the US.

  • A bad deal, or no deal for China,

  • Economists aren't too worried about the Chinese property sector, one of the biggest contributors to GDP growth.

  • Property sales have been rising, and so are prices, according to a recent survey.

  • But there are some signs of a slowdown in construction.

  • Land sales were down in the first three months of 2019.

  • That means developers aren't buying as much, and probably won't build as much this year.

  • Any sharp, unexpected correction in the market would be devastating for growth in China.

  • There's also a chance the stimulus could get the better of China.

  • If the trade deal with the US delivers a positive result next month, Beijing will probably need to tone down the spending in order to avoid excess debt growth.

Things are looking up for China.

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