China’s GDP grows by an impressive 5.3% in Q1
By Rhod Mackenzie
China's GDP grew by 5.3% in Q1 2024, exceeding market expectations. This strong start sets a solid foundation for the economy to achieve its pre-set goal of 5% growth for the year.
Chinese analysts have stated that China remains one of the fastest growing major economies in the world, thanks to solid export growth and robust high-tech industrial output. They also noted that China continues to play a leading role in driving global economic recovery.
The data was significantly higher than the average forecast of 4.6 percent by economists polled by Reuters. This reflects the resilience of the Chinese economy and the attractiveness of its vast consumer market and manufacturing goods. It also offers a strong rebuttal of some Western media's narrative of the Chinese economy reaching its peak, according to experts.
According to data released by the National Bureau of Statistics (NBS) on Tuesday, retail sales increased by 4.7% YoY to 12.03 trillion yuan ($1.66tn) in Q1. Industrial added-value rose by 6.1%, and fixed-asset investment increased by 4.5% to 10tn yuan.
The official data showed that the unemployment rate dropped by 0.1 percentage points to 5.2% in March.
At a press conference held on Tuesday at the State Council Information Office, Deputy Head of NBS Sheng Laiyun stated that China's economy has made a positive start, with several favourable factors accumulating, which has laid a strong foundation for achieving the annual development targets.
In the next stage, China will actively cultivate and develop new, high-quality productive forces. It will also strengthen the implementation of the government's macro policies and continue to pursue high-quality economic growth while appropriately increasing economic output.
Analysts have indicated that the data shows solid overall growth of the Chinese economy in the first quarter, despite the slowdown in industrial output and consumption in March due to the disappearance of stimulus from holiday spending and low base effect.
The economy grew 1.6 percent quarter over quarter, which is faster than the expected 1.4 percent growth predicted by market analysts.
According to Tian Yun, a veteran economist based in Beijing, the GDP growth in the first quarter met market expectations and indicates a positive start for the world's second-largest economy.
Tian stated that the recovery momentum has been sustained by growth in the supply side, particularly in high value-added industries that represent the new quality productive forces. He stated that the foreign trade data for the first quarter showed a noticeable improvement from last year's stagnant performance, indicating a rebound in global demand that is expected to boost industrial growth this year.
In March, retail sales increased by 3.1%, a decrease from the 5.5% growth seen in February. Industrial value-added rose by 4.5%, which is a slowdown from the 7% recorded in the January-February period.
Fixed-asset investment increased by 4.5% in the first three months, compared to a 4.2% increase in the January-February period, according to data from NBS.
The investment reading is a positive sign, despite new construction projects experiencing a two-digit decline in the first quarter due to an ongoing adjustment in the property sector, as noted by Tian.
According to Professor Sun Chuanwang from Xiamen University, growth in the quarter was driven by strong momentum in equipment manufacturing, high-tech industries, and consumption, including the tourism sector. He also noted that the shift towards high-quality development was a defining characteristic of the quarter.
Tian noted that, to achieve the annual goal of expanding at around 5 percent this year, more supportive measures are needed to consolidate the recovery momentum, considering the high base of last year's second quarter.
According to Tian, this year's economic prospects depend on several key factors, including a sustained rebound in foreign trade and an end to structural adjustment in the property sector. Chinese policymakers should focus their efforts on these areas.
According to Cao Heping, an economist at Peking University, China's vast market of 1.4 billion consumers, including a 400 million strong middle class, and diverse industries, will provide a stable anchor for the global economy amidst the current complex situation. He notes that China's industry capacity is far stronger than the combined capacity of the 36 developed economies and their 1 billion people market.
Analysts have noted that the Chinese economy is currently grappling with issues such as subdued consumer confidence, a correction in the property sector, and weak private sector investment. However, the country's high levels of household savings and ample policy space are healthy, which allows policymakers more time to address the impact of COVID-19 on consumption.
According to data released by the General Administration of Customs on Friday, China's total imports and exports reached 10.17 trillion yuan in the first quarter of 2024, growing at 5 percent year-on-year, the fastest pace in six quarters.
Since the start of 2024, China has intensified efforts to boost consumption by promoting equipment upgrades and consumer goods trade-ins. Additionally, the country is accelerating the development of new, high-quality productive forces and AI initiatives.
China has also increased its pace of opening up, with the announcement of 24 measures to stabilize foreign investment and a range of visa exemption policies to facilitate business travel.
Amid signs of a strong recovery in the Chinese economy, major international financial institutions are revising up China's GDP projections for the year.
China's official manufacturing PMI, a key gauge of factory activity, stood at 50.8 in March, returning to expansion territory for the first time since September 2023.
Goldman Sachs and Citi recently released separate reports stating that China's economy has had a good start in 2024. The Xinhua News Agency reports that the Chinese government's GDP growth target of 'around 5 percent' is expected to be achieved, and the forecast for China's full-year GDP growth rate has been raised.
