China’s economy grew faster than expected in the first quarter, data showed on Tuesday, offering some relief to officials as they try to shore up growth in the face of protracted weakness in the property sector and mounting local government debt.
However, several March indicators released alongside the gross domestic product data – including property investment, retail sales and industrial output – showed that demand at home remains frail, weighing on overall momentum.
The world’s second-largest economy grew 5.3% in January-March from the year earlier, official data showed, comfortably above a 4.6% analysts’ forecast in a Reuters poll and up from the 5.2% expansion in the previous quarter. On a quarterly basis growth picked up to 1.6% from 1.4% in the previous three months.
“The strong first-quarter growth figure goes a long way in achieving China’s ‘around 5%’ target for the year,” said Harry Murphy Cruise, economist at Moody’s Analytics.
Analysts have described as ambitious the growth target Beijing aims to accomplish with help of fiscal and monetary stimulus measures, noting last year’s growth rate of 5.2% was likely flattered by a rebound from a COVID-hit 2022.
That bounce, however, fizzled away under the weight of the property downturn, rising local debt and weak consumer spending.
Beijing turned to the tried and tested spending on infrastructure and high-tech manufacturing to lift the economy. That however, raised concerns about public finances, prompting Fitch to cut its outlook on China’s sovereign credit rating to negative last week.