China’s economy expanded faster than anticipated at the beginning of the year, mostly because high-tech industry saw rapid expansion.
The National Bureau of Statistics said on Tuesday that the first-quarter GDP increased by 5.3% over the same period last year.
In addition, it represented a faster growth rate than the 5.2% growth in the preceding three months.
“The first quarter saw the Chinese economy get off to a good start… laying a good foundation for achieving the goals for the whole year,” NBS spokesperson Sheng Laiyun stated at a Beijing press conference that coincided with the data release.
However, he conceded that “the groundwork for financial stability and advancement is not entirely established.”
Due to robust growth in high-tech manufacturing, industrial production increased 6.1% in the first quarter compared to the same period last year.
Specifically, there was a 40% increase in the manufacture of electronic components, EV charging stations, and 3D printing equipment compared to the previous year.
China’s manufacturing purchasing managers’ index (PMI) increased last month for the first time in six months, according to an official poll. As foreign demand increased, the privately operated Caixin/S&P manufacturing PMI also saw its best reading in over a year.
Given the persistent slump in the real estate market and the continued low levels of corporate and consumer confidence, many observers viewed China’s 5% annual growth objective for 2024 as ambitious.
In order to encourage bank lending and expedite central government spending to promote infrastructure projects, the authorities have lowered interest rates this year.
The official goal of “roughly 5%” GDP growth in 2024 is doable, according to Frederic Neumann, chief Asia economist at HSBC” told CNN.
Data on Tuesday showed that retail sales rose 4.7% from January to March, boosted by investment in sports and entertainment, cigarettes and alcohol and food services.
Investment in fixed assets – such as factories, roads and power grids – rose 4.5%. during the period.
According to Moody’s Analytics economist Harry Murphy Cruise, “there’s a growing mismatch in China’s economy; manufacturers are doing the heavy lifting, while households sit on the sidelines.”
China’s “new three” industries—EVs, solar panels, and batteries—account for a large portion of the positive news in the manufacturing sector.
According to Cruise, “officials have made significant investments to support these strategic industries, and are reaping the benefits as production soars and exports, especially for EVs, soar amid a broader pullback in global demand.”
Real Estate Scenery
According to NBS data, real estate investment fell 9.5% in the first quarter compared to the same period last year. In the same time frame, sales of new properties fell 27.6%.
Separately, based on the most recent data release from the NBS, Goldman Sachs calculated that new property prices in 70 cities decreased by 2% in March compared to a year earlier, a pace of decline that was quicker than that of 1.3% in February.
According to the NBS data, household confidence for employment and income is near “the historical bottom,” which dragged down retail sales in March because demand had been released during the Lunar New Year holidays that took place weeks earlier, said Chaoping Zhu, Shanghai-based global market strategist at JP Morgan Asset Management.
