Lunar New Year festivities drive China’s economy to 5.3% growth in first quarter

China’s economy expanded by 5.3% in the first quarter, exceeding expectations despite challenges posed by the country’s property crisis. The growth was fueled by government initiatives to boost economic demand, with the figure surpassing a Reuters analyst forecast of 4.6%. The National Bureau of Statistics in China noted that the economy had a strong start in the first quarter, providing a solid foundation for the rest of the year. However, the agency cautioned that economic stability was not yet firmly established.

Since the onset of the Covid-19 pandemic, China has faced a slowdown in demand and a prolonged property crisis. Several Chinese real estate behemoths, including Evergrande and Country Garden, have defaulted on their debts in recent years. The property sector continued to face challenges in the last quarter, with property investment plummeting by 9.5% year-on-year. On the other hand, China’s industrial output surged by 6.1% in the last quarter, while retail sales and fixed investment in factories and equipment also posted gains.

The Lunar New Year celebrations at the end of January likely boosted household spending in the last quarter. However, both imports and exports in March were down compared to the same month the previous year, with exports declining by 7.5%. Despite these challenges, Beijing has set a GDP growth target of 5% for the year, aiming to achieve this ambitious objective in the current economic climate. The release of these economic indicators coincided with German Chancellor Olaf Scholz’s visit to China for meetings with President Xi Jinping, underscoring the global significance of China’s economic performance.