China’s economy grew faster than expected in the first quarter
China’s economy kicked off the year with more strength than anticipated, despite the worsening crisis in its property sector.
Official statistics reveal that in the first quarter of 2024, the gross domestic product (GDP) surged by 5.3% compared to the same period last year, surpassing expectations.
Earlier predictions had suggested a growth slowdown to 4.6% in the initial quarter for the world’s second-largest economy.
Beijing had recently announced an ambitious annual growth target of “around 5%” for China. The National Bureau of Statistics (NBS) data also indicated a decrease in first-quarter retail sales growth, a crucial indicator of Chinese consumer sentiment, which dipped to 3.1%.
Harry Murphy Cruise from Moody’s Analytics emphasized the necessity for household participation to achieve China’s approximately 5% growth goal, stating, “You cannot manufacture growth forever so we really need to see households come to the party.”
During the same period, property investment plummeted by 9.5%, underscoring the obstacles encountered by China’s real estate sector. These statistics arrive amidst China’s ongoing struggles with a property market crisis, a sector that contributes approximately 20% to the economy, as per the International Monetary Fund (IMF).
Moreover, the latest data revealed that new home prices experienced their sharpest decline in over eight years in March.
The real estate industry crisis was highlighted in January when property giant Evergrande was ordered to liquidate by a court in Hong Kong.
Rival developers Country Garden and Shimao have also been hit with winding-up petitions in the city.
Last week, credit ratings agency Fitch cut its outlook for China, citing increasing risks to the country’s finances as it faces economic challenges.
At the annual gathering of China’s leaders in March officials said the economy would grow by 5.2% in 2023.
For decades the Chinese economy expanded at a stellar rate, with official figures putting its GDP growing at an average of close to 10% a year.
