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China’s gross domestic product grew 5.3 per cent in the first quarter against a year earlier, exceeding market expectations as Beijing tries to steer a manufacturing-led revival of the world’s second-largest economy.
The strong first-quarter growth rate, which compares with analyst forecasts of 4.6 per cent in a Reuters poll and an expansion of 5.2 per cent for the full year in 2023, follows mixed economic data in recent weeks.
“Generally speaking, the national economy got off to a good start in the first quarter . . . laying a good foundation for . . . the whole year,” the National Bureau of Statistics said.
It added that the “external environment is becoming more complex, severe, and uncertain, and the foundation for economic stability . . . is not yet solid”.
Industrial production grew 6.1 per cent in the first quarter compared with a year earlier, the NBS said, while industrial producer prices fell 2.7 per cent as deflationary pressures continued to weigh on the manufacturing sector.
Fixed asset investment grew 4.5 per cent against a year earlier in the quarter, boosted by a 9.9 per cent increase in manufacturing investment that was offset by a 9.5 per cent fall in property investment. Retail sales expanded 4.7 per cent in the first quarter, down from 5.5 per cent for the January-February period.
“It’s better than expected, at the same time overall the retail sales and the property numbers look relatively weak,” Larry Hu, chief China economist at Macquarie, said of the first-quarter GDP growth number.
He suggested the figures were driven by “exports and capex for new energy” industries, adding that any “step up” in stimulus was unlikely because growth was in line with official targets. “They’re probably going to hold off until exports slow down or property gets even worse,” he said.
The government has set a GDP growth target of 5 per cent this year. But inflation fell below analysts’ estimates in March, indicating that deflationary pressures persist in China as policymakers try to stimulate domestic demand to offset a property sector crisis.
Since 2021, the Chinese economy has grappled with a wave of real estate developer defaults that have weighed on construction activity and confidence in the market. In recent weeks, market concerns have focused on state-linked Vanke amid continued weakness in home sales.
Exports in the first quarter were also weaker in dollar terms, missing expectations. But analysts said export volumes have continued to expand as producers grab more global market share to boost revenue.