Surprising Resilience: China’s Economy Outperforms Expectations in Q1, Faces Challenges in Q2

In the first quarter, China’s economy exceeded expectations with a 5.3% annual growth rate compared to analysts’ forecasts of 4.8%. This growth can be attributed to policies and increased demand. Despite struggling to recover from the impact of COVID-19, with a slowdown in demand and a property crisis affecting growth, the economy has shown signs of resilience.

Industrial output increased by 6.1% in the first quarter compared to the previous year, while retail sales grew by 4.7%. Fixed investment for the same period also saw a 4.5% increase. The strong manufacturing performance and increased household spending during the Lunar New Year holidays were key drivers of this growth, along with supportive policies for investments.

However, there are signs of weakness emerging in March, with uncertainties in external demand and a decline in import and export figures. Inventory adjustments, normalization of post-holiday spending, and cautious stimulus measures could impact growth in the second quarter. Despite this, policymakers have introduced various fiscal and monetary measures aimed at boosting the economy and achieving their goal of setting a GDP growth target of 5% for 2024.

In conclusion, China’s economy has shown resilience in the face of challenges brought on by COVID-19 pandemic but still faces uncertainty in external demand and decline in import/export figures which may impact growth in second quarter. Policymakers are taking proactive measures to support economic recovery and achieve their goal set for 2024