Chinese GDP surprises and exceeds expectations. The economy of the Asian giant advanced 5.3% year-on-year in the first quarter, according to data published this Tuesday by the National Statistics Office. It exceeds the Reuters consensus, which expected a rebound of 4.6%, without managing to clear up doubts.
The figure improves the pace of 2023 (5.2%) by one tenth and allows growth of 1.6% between January and March. The manufacturing sector and household consumption served as drivers, but March statistics, also revealed today, show contrasts in real estate investment, retail sales or industrial production. Thus, the push would have been concentrated in January and March and questions whether progress will be sustained.
Chinese authorities have set a target of growth of 5% or higher in 2024. Despite the positive figures, Louise Loo, chief China economist at Oxford Economics, warns that difficulties are seen that will continue to affect the Chinese economy this year. , including the uncertainty of external demand and disinflationary pressures. “The momentum is fading,” she notes.
The activity figures for March show this. Industrial production grew by 4.5%, below the 6% forecast and the previous 7%. Retail sales rose 3.1%, again worse than expectations and the previous data. Yes, there was a better tone in investment, which rose 4.5% in the quarter over the 4.1% expected. “At first glance, the overall number looks good… but I think the momentum is actually quite weak in the end,” assesses Alvin Tan of RBC Capital Markets.
Doubts can drive new stimuli to support growth. Beijing is now focusing public spending efforts on infrastructure, a textbook recipe to spur the economy, and high-tech manufacturing.
The main challenge is in the real estate sector, with a prolonged puncture. Zichun Huang, economist at Capital Economics, assures that monthly activity data suggests that the recovery “remains fragile”, with an adjustment that has “barely begun” in the brick and mortar and that will have a downward impact in the coming years. Real estate investment fell 17% in March, almost double the previous figure, while sales sank 24%, four points more.
Doubts have been felt in the markets. Hong Kong’s Hang Seng index fell 2% and the CSI 300, with the top 300 listed, fell 1%.
