China’s Q1 GDP grows faster than expected
Growth rate solid at 5.3% but March data shows demand still feeble
— China’s economy grew faster-than-expected in the first quarter, data showed on Tuesday, offering some relief to officials as they try to shore up growth in the face of protracted weakness in the property sector and mounting local government debt.
However, a raft of March indicators released alongside the GDP data — including property investment, retail sales and industrial output — showed that demand at home remains frail and is retarding overall momentum.
The government has unveiled a raft of fiscal and monetary policy measures in a bid to achieve what analysts have described as an ambitious 2024 GDP growth target of around 5 percent, noting that last year’s growth rate of 5.2 percent was likely flattered by a rebound from a COVID-hit 2022.
Gross domestic product (GDP) grew 5.3 percent in January-March from the year earlier, data released by the National Bureau of Statistics showed, comfortably above analysts’ expectations in a Reuters poll for a 4.6 percent increase and slightly faster than the 5.2 percent expansion in the previous three months.
“The strong first-quarter growth figure goes a long way in achieving
China’s ‘around 5 percent’ target for the year,” said Harry Murphy Cruise, economist at Moody’s Analytics.
“Industrial production also supported through the quarter, but weak March data is cause for some concern. Similarly concerning, China’s households continue to keep their wallets closed.”
On a quarter-by-quarter basis, GDP grew 1.6 percent in the first quarter, above the forecast for growth of 1.4 percent.
The world’s second-largest economy has struggled to mount a strong and sustainable post-COVID bounce, burdened by a protracted property downturn, mounting local
government debts and weak private-sector spending.
Fitch cut its outlook on China’s sovereign credit rating to negative last week, citing risks to public finances as Beijing channels more spending towards infrastructure and high-tech manufacturing.
The government is drawing on infrastructure work — a well-used playbook — to help lift the economy as consumers are wary of spending and businesses lack confidence to expand.
The economy was off to a solid start this year, but March data on exports, consumer inflation, producer prices and bank lending showed that momentum could falter again and reinforced calls for more stimulus to shore up growth.
Indeed, separate data on factory output and retail sales, released alongside the GDP report, underlined the persistent weakness in domestic demand.
Industrial output in March grew 4.5 percent from a year earlier, compared with a forecast increase of 6.0 percent and a gain of 7.0 percent for the January-February period.
Growth of retail sales, a gauge of consumption, rose 3.1 percent yearon-year in March, against a forecast increase of 4.6 percent and slowing from a 5.5 percent gain in the January-February period.