Despite challenges posed by the COVID-19 pandemic, China’s economy has shown resilience. In the first quarter, the world’s second-largest economy grew at a 5.3% annual pace, surpassing analysts’ forecasts of around 4.8%. This was an increase of 1.6% compared to the previous quarter.
Factors such as a slowdown in demand and a property crisis had previously weighed on growth. However, the economy’s performance in the first quarter was boosted by strong industrial output, growing retail sales, and increased fixed investment.
The positive data for the first quarter comes after recent reports of a decline in import and export figures for March, as well as a slowdown in inflation. While the economy benefitted from strong manufacturing performance and increased household spending during the Lunar New Year holidays, there are concerns about weakness in March activity indicators and unpredictable external demand conditions.
China economist Louise Loo of Oxford Economics highlighted potential challenges for the second quarter, including the unwinding of excess inventory, normalization of household spending post-holidays, and cautious stimulus measures. Policymakers in Beijing have introduced fiscal and monetary policy measures to boost the economy, with an ambitious GDP growth target of 5% for 2024.