Economic growth higher than expected in Q1

China's economy grew by a better-than-expected 7.4 percent in the first quarter of 2014, the National Bureau of Statistics said on Wednesday.

The rate is the slowest since 2012 as Beijing's broad reforms target raising growth quality, but still beat the market consensus of 7.2 percent. Analysts expect growth to recover to 7.5 percent in the second quarter.

Other economic data published on Wednesday showed economic activities started to gained momentum in March. March activity data showed factory output grew 8.8 percent from a year earlier, slightly below forecasts of 9 percent expansion but 0.1 percentage points higher than the 8.7 percent average in January and February.

China's first quarter GDP grows 7.4%

China's Q1 retail sales up 12%

March retail sales also beat expectations with an annual increase of 12.2 percent, compared to predictions of a 12.1 percent gain.

Fixed asset investment rose 17.6 percent in the first three months of the year, 0.3 percentage points lower the average of January and February, as Beijing deepens its efforts to eradicate excessive investment and industrial overcapacity.

NBS said last week that inflation remained low in March, meaning Beijing has more room to stimulate growth if it deems that necessary to meet its full year target of 7.5 percent. The consumer price index, the main gauge of inflation, grew 2.4 percent year-on-year in March. The index dropped 0.5 percent from February.

Guan Qingyou, an analyst at Mingsheng Securities, said the 7.4 percent growth in the first quarter slightly beat his expectation. The government won't have to take "strong measures" to stimulate growth and any macro-economic policy tone will be fine-tuning, he said.

Lu Zhengwei, Shanghai-based chief economist at Industrial Bank, said he is optimistic that growth will pick up to 7.5 percent in the second quarter, but worried by the fact that stimulus measures achieved limited results over the latest round of the slowdown. A strong yuan hurt exports in the first quarter, he added, and Beijing should make foreign exchange rate reform the priority in its reform agenda.

Li Daxiao, Beijing-based chief economist with Yingda Securities, said the growth rate will recover in the second quarter and the negative impact on the stock market will wane. Blue chips already have a strong foundation, which means that the overall stock market is anchored on a strong base, Li said.

Economy shows 'optimistic changes': Li	Manufacturing under lingering pressure