China's economy exceeded expectations in the first quarter of the year, with a growth rate of 5.3% annually, surpassing analysts' forecasts of around 4.8%. This growth was attributed to supportive policies and increased demand, as indicated by official data released on Tuesday. Compared to the previous quarter, the economy saw a 1.6% increase in growth.
Despite challenges stemming from the COVID-19 pandemic, China's economy has shown resilience. Factors such as a slowdown in demand and a property crisis have posed obstacles to its recovery. However, recent data has shown positive signs of progress.
Industrial output for the first quarter rose by 6.1% compared to the same period last year, while retail sales experienced a 4.7% annual growth rate. Fixed investment also saw an increase of 4.5% in Q1 compared to the previous year.
The strong performance in the first quarter was driven by robust manufacturing activity, increased household spending during the Lunar New Year holidays, and supportive government policies aimed at boosting investments. However, there are concerns about potential weaknesses in March data following the holiday season, as well as uncertainties in external demand conditions, particularly evident in the sharp decline in exports for the month.
Economists anticipate that factors such as inventory adjustments, normalization of post-holiday spending patterns, and cautious stimulus measures could impact growth in the second quarter. To counter these challenges, policymakers in China have introduced a range of fiscal and monetary policies to stimulate economic activity. Notably, China has set an ambitious GDP growth target of 5% for the year 2024.
