China’s economy exceeded expectations in the first quarter of the year, receiving a boost from government policies and increased demand. Official data revealed that the world’s second-largest economy grew at an annual pace of 5.3% in January-March, surpassing analysts’ forecasts of about 4.8%. Compared to the previous quarter, growth was up 1.6%. Despite struggling to recover from the COVID-19 pandemic, with a slowdown in demand and a property crisis, China’s economy showed promising signs of improvement.
Industrial output for the first quarter saw a 6.1% increase compared to the same period last year, and retail sales grew at an annual pace of 4.7%. Fixed investment for the quarter grew by 4.5% from a year ago. The economy was supported by strong manufacturing performance, increased household spending due to the Lunar New Year holidays, and policies aimed at boosting investments, according to China economist Louise Loo of Oxford Economics. However, post-holiday weakness and unpredictable external demand conditions could impact growth in the second quarter.
To combat economic challenges, policymakers have implemented various fiscal and monetary policy measures to stimulate growth. China has set a target of achieving a 5% gross domestic product (GDP) growth for 2024. The outlook for the Chinese economy remains uncertain, with factors such as inventory adjustments, normalization of post-holiday spending, and cautious stimulus measures potentially affecting growth in the coming months.