China’s economy expanded 5.3% in Q1 2024

HONG KONG — China’s economy in the first quarter beat expectations while receiving a boost from policies and an increase in demand, the government said Tuesday.

The world’s second-largest economy expanded at a 5.3 percent annual pace in January-March, beating analysts’ forecasts of about 4.8 percent, official data show. Compared to the previous quarter, growth was up 1.6 percent.

China’s economy has struggled to bounce back from the Covid-19 pandemic, with a slowdown in demand and a property crisis weighing on its growth.

The better-than-expected economy data came days after China reported a decline in import and export figures for March as well as a slowdown in inflation following months of deflationary pressures.

Industrial output for the first quarter was up 6.1 percent compared to the same time last year, and retail sales grew at an annual pace of 4.7 percent. Fixed investment for Q1 grew 4.5 percent compared to the same period a year ago.

The economic growth for Q1 was supported by “broad manufacturing outperformance,” festivities-boosted household spending due to the Lunar New Year holidays as well as policies that help boost investments, according to China economist Louise Loo of Oxford Economics.

“However, ‘standalone’ March activity indicators suggest weakness coming through post-Lunar New Year,” she said. “External demand conditions also remain unpredictable, as seen in March’s sharp export underperformance.”

Loo pointed out that factors such as an unwinding of excess inventory, a normalization of household spending post-holidays as well as cautious stimulus would affect growth for the second quarter.

Policymakers have unveiled a raft of fiscal and monetary policy measures as Beijing seeks to boost the economy.

China has set an ambitious gross domestic product growth target of five percent for 2024.