China’s economy expanded at a faster than expected pace in the first three months of the year, helped by policies aimed at stimulating growth and stronger demand, the government said Tuesday. The world’s second-largest economy expanded at a 5.3% annual pace in January-March, beating analysts’ forecasts of about 4.8%, official data show. Compared to the previous quarter, the economy grew 1.6%.
Quick Read
- China’s Economic Growth Surpasses Expectations: China reported a faster-than-anticipated economic expansion in the first quarter of 2024, achieving a 5.3% annual growth rate, which exceeded analyst forecasts of around 4.8%.
- Quarterly Growth and Economic Indicators: On a quarter-over-quarter basis, the economy grew by 1.6%. Industrial output increased by 6.1% year-over-year, and retail sales rose by 4.7%. Fixed investment in factories and equipment also saw a growth of 4.5%.
- Influence of Policies and Market Dynamics: The robust growth in early 2024 was driven by significant manufacturing performance, enhanced household spending during the Lunar New Year, and supportive governmental policies aimed at stimulating investment.
- Challenges and Outlook: Despite the positive growth figures, standalone activity indicators for March suggested potential economic weaknesses post-holiday season. The global demand environment remains volatile, as evidenced by a sharp decline in China’s exports and imports in March, which fell by 7.5% and showed signs of deflationary pressures.
- Policy Measures and Targets: Chinese policymakers have introduced several fiscal and monetary initiatives to stimulate the economy amidst ongoing challenges from the COVID-19 pandemic and a struggling property sector. The government has set an ambitious GDP growth target of about 5% for 2024.
- Market Reactions: Despite the positive economic data, Asian stock markets fell, influenced by declines on Wall Street. The Shanghai Composite index dropped by 1.4%, while the Hang Seng in Hong Kong and the Shenzhen index saw declines of 1.9% and 2.8%, respectively. The strong growth data may lead to concerns about the Chinese government potentially scaling back on further economic stimulus.
The Associated Press has the story:
China’s economy grew 5.3% in first quarter, beating expectations
Newslooks- HONG KONG (AP) —
China’s economy expanded at a faster than expected pace in the first three months of the year, helped by policies aimed at stimulating growth and stronger demand, the government said Tuesday. The world’s second-largest economy expanded at a 5.3% annual pace in January-March, beating analysts’ forecasts of about 4.8%, official data show. Compared to the previous quarter, the economy grew 1.6%.
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 data Tuesday came days after China reported its exports sank 7.5% in March compared to the year before, while imports also weakened. Inflation cooled, reflecting deflationary pressures resulting from slack demand amid a crisis in the property sector.
Industrial output for the first quarter was up 6.1% compared to the same time last year, and retail sales grew at an annual pace of 4.7%. Fixed investment, in factories and equipment, grew 4.5% compared to the same period a year earlier.
The strong growth in January-March was supported by “broad manufacturing outperformance,” festivities-boosted household spending due to the Lunar New Year holidays and policies that helped 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 noted that an unwinding of excess inventory, normalization of household spending after the holidays and a cautious approach to government spending and other stimulus will affect growth in this 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 (GDP) growth target of about 5% for 2024.
Such strong growth usually would push share prices across the region higher. But on Tuesday, Asian shares fell sharply after stocks retreated on Wall Street.
The Shanghai Composite index lost 1.4% and the Hang Seng in Hong Kong lost 1.9%. The benchmark for the smaller market in Shenzhen, in southern China, lost 2.8%.
Stronger growth in the region’s biggest economy normally would be seen as a positive for its neighbors, which increasingly rely on demand from China to power their own economies. However, strong growth figures are also viewed as a signal that the government will hold back on further stimulus.
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