China's GDP growth rate beat market expectations to reach 5.3% year-on-year in the first quarter, kicking off a good start of the year and laying a strong foundation for achieving the annual development targets. China's total GDP reached CNY29.63 trillion, up by 1.6 percentage points over the fourth quarter of 2023, according to the National Bureau of Statistics (NBS). “China's 5.3% growth in the first quarter is much higher than what the U.S., EU or Japan will achieve in 2024. With stronger fiscal and monetary stimulus, the figure could be higher,” Gary Hufbauer, Senior Fellow at the Peterson Institute for International Economics, told the Global Times. The value added of high-tech manufacturing enterprises increased by 7.5%, 2.6 percentage points faster than in the fourth quarter of 2023, which shows that the Chinese central government is accelerating the development of new quality productive forces to build new growth drivers, Wan Zhe, Professor at the Belt and Road School of Beijing Normal University, told the Global Times.
The data also offered a strong rebuttal to the “overcapacity” rhetoric to suppress China's green industries, Cong Yi, Professor at the Tianjin University of Finance and Economics, told the Global Times. China's production capacity is good, and many of its high-end industries have gained international competitiveness thanks to its advantages in such aspects as industrial system and abundant human resources as well as huge investment in innovations, he said. In addition to sound industrial growth, the country's investment in fixed assets reached CNY10 trillion in the first quarter, up 4.5% year-on-year, and 1.5 percentage points faster than in 2023. The total retail sales of consumer goods reached CNY12.03 trillion, up 4.7% year-on-year, according to the NBS. Driven by the issuance of additional government bonds worth CNY1 trillion starting from the end of last year, local governments have stepped up efforts in boosting infrastructure investment, which contributed to the economic growth in the first quarter of the year, Wan said. Meanwhile, the country's exports also rebounded amid growing demand.
The country has set a growth target of around 5% for 2024, a goal that experts believe is well within reach considering the country's sound economic fundamentals and policy measures. On the back of the sound momentum of rebound in China, some foreign financial institutions, including Goldman Sachs Group and Morgan Stanley, have recently raised their forecasts for China's economic growth in 2024 to 5% or 4.8%. China's industrial output significantly boosted the economy in the first quarter of 2024, with value-added industrial output up 6.1% year-on-year. The sector contributed 37.3% to GDP growth. High-tech manufacturing emerged as a significant bright spot in the overall growth, increasing by 7.5%, or 2.6 percentage points faster than in the fourth quarter of 2023.
The South China Morning Post points out that property investment, a key drag on GDP growth last year, fell by 9.5% in the first quarter, year-on-year. The start of new construction projects was down 27.8%, and sold floor space dropped by 19.4%. Private investment grew by 0.5% in the first three months of the year, compared with a fall of 0.4% in 2023.
Looking forward, Beijing-based economist Tian Yun told the Global Times that considering the high base of last year's second quarter, more supportive measures are needed to consolidate the recovery momentum. “Several macro-economic figures recorded in March are lower than those in the first two months of the year – partially due to a high base the same month last year – which shows that domestic recovery in some areas remains weak,” Tian said, calling for the issuance and use of ultra-long special government bonds in the second quarter to boost fiscal support. Foreign trade also needs policy support, as its rebound would alleviate pressure on the economy in the second half of the year.
China's first-quarter retail sales jumped 4.7% year-on-year to CNY12.03 trillion, showing the stable expansion of consumption after a surge in consumer spending during the Spring Festival holidays at the beginning of the year. As consumer confidence continues to rebound and macro policies to shore up the market bear fruit, observers expect China's consumption recover to “strengthen moderately” throughout the year, providing new impetus to propel the world's second-largest economy to reach a GDP growth target of around 5%. “The consumer market was a relatively positive area in the economy during the first quarter and there were multiple highlights. Spending on consumer products such as food, daily necessities and some housing-related items remained stable, while holiday consumption continued to boom,” Sheng Laiyun, Deputy Director of the NBS, said at a press briefing hosted by the State Council Information Office (SCIO). Analysts expect the upcoming May Day holidays to be another prosperous period for consumption, giving another huge boost to GDP, the Global Times reports.
