China's Q1 GDP growth exceeds expectations, reaches 5.3%
China's gross domestic product (GDP) growth for the first quarter of 2024 has reached 5.3%, according to data released by the National Bureau of Statistics. This figure surpasses the previous quarter's growth of 5.2% and outperforms the average forecast of 4.5% predicted by economists in a recent Nikkei poll. The robust economic performance comes as China aims for an ambitious full-year growth target of around 5% for 2024.
Sequential GDP expansion outperforms projections
On a sequential basis, China's GDP saw a 1.6% expansion in the January-March quarter, surpassing both the projected increase of 1.4% and the revised gain of 1.2% from the previous quarter. Despite this encouraging performance, data from March revealed a slowdown in industrial output and retail sales growth compared to the January-February period. This suggests potential weaknesses in consumer demand and business confidence within China's economy.
Property sector struggles amid economic growth
The property sector, a significant component of China's economy, continues to face challenges with a 9.5% year-on-year decline in investment in Q1 2024. Analysts are divided on the impact of these GDP figures, with some viewing them as a potential boost for Chinese equities rebound, while others warn of economic risks due to over-reliance on the property market. These risks include potential deflation and further economic issues.
Government measures to achieve growth targets
In response to potential economic challenges, China's government has implemented several fiscal and monetary policy measures. These strategies focus on infrastructure investment and high-tech manufacturing, aiming to achieve the country's growth target. However, there are doubts about the long-term viability of this approach and the need to address underlying issues such as weak consumer sentiment and the slump in the property market.
Key economic indicators show mixed results
China has released additional key economic data points, including a 4.5% increase in industrial production in March year-on-year and a 6.1% rise in industrial output for Q1. Retail sales saw a modest uptick of 3.1%. Fixed-asset investment grew by 4.5% in the first three months, while the property sector continued to contract with investment dropping by 9.5%. The urban unemployment rate fell slightly to 5.2% last month from February's 5.3%.
