The National Bureau of Statistics (NBS) of China has reported that the Chinese economy outperformed market expectations by growing at a rate of 5.3% year-on-year in the first quarter of 2024. This growth surpassed both the previous quarter’s rate of 5.2% year-on-year and the first quarter of 2023’s rate of 4.5% year-on-year.
The improved growth is attributed to various measures implemented by the government to restore balance in the economy, including increased investment in infrastructure and high-tech manufacturing. Despite challenges in the property sector and mounting local government debt, the Chinese government’s efforts have resulted in significant growth in industrial production, which expanded by 6.1% year-on-year compared to 3.0% year-on-year in the first quarter of 2023. This growth was underpinned by a solid improvement in high-technology manufacturing.
However, growth in retail sales moderated to 4.7% year-on-year, down from 5.4% year-on-year in the first quarter of 2023. Nevertheless, retail sales remained positive due to increased spending on sports and entertainment activities, cigarettes and alcohol, and catering services.
On a quarter-on-quarter basis, the Chinese economy expanded by 1.6%, signaling the seventh consecutive quarter of expansion and the highest print since the first quarter of 2023 (+2.3% year-on-year).
Looking ahead, while government stimulus is expected to continue supporting economic activities in the near term, challenges in the real estate sector and sluggish domestic demand are likely to weigh on overall growth prospects. Accordingly, the International Monetary Fund (IMF) forecasts China’s growth to settle at 4.6% year-on-year in 2024, compared to the growth rate of 5.2% year-on-year in the previous fiscal year.
