China's GDP growth hits 5.3% in Q1-2024 - and that's higher than expectations

Shanghai: China's economy grew 5.3 per cent in the first quarter year-on-year, official data show, comfortably beating expectations and a welcome sign for policymakers as they try to shore up demand and confidence in the face of a protracted property crisis.

Analysts polled by Reuters had expected first-quarter GDP to expand 4.6 per cent from a year earlier, compared to 5.2 per cent in the previous three months. The China government is aiming for economic growth of around 5 per cent for 2024 - a target that many analysts believe is ambitious and may require more stimulus.

On a quarter-by-quarter basis, GDP grew 1.6 per cent in January-March, above expectations for a 1.4 per cent rise and compared with a revised 1.2 per cent gain in the previous quarter.

According to Alvin Tan, Head OF Asia FX Strategy at RBC Capital Markets, "On the face of it, the headline number looks good. But I think the momentum is actually quite weak at the end. It basically looks quite front-loaded, the strength in the economy.

"Front-loaded in the January-February point, which is basically the Chinese New Year, if you think about it. And essentially, it kind of weakened from there."

Looking for that bounce back

China's economy has struggled to mount a strong and sustainable post-Covid bounce, burdened by a protracted property downturn, mounting local government debts and weak private-sector spending. The world's second-biggest economy is expected to grow at a 4.6 per cent pace in 2024 year-on-year, according to a Reuters poll, falling short of the official target of around 5 per cent.

China has unveiled fiscal and monetary policy measures in a bid to achieve what analysts have described as an ambitious 2024 growth target, noting that last year's growth rate of 5.2 per cent was likely flattered by a comparison with a Covid-hit 2022.

The government is drawing on infrastructure work - a well-used playbook - to help lift the economy as consumers are wary of spending and businesses lack confidence to expand.

The rating agency Fitch cut its outlook on China's sovereign credit rating to negative last week, citing risks to public finances as Beijing channels more spending towards infrastructure and high-tech manufacturing, amid a shift away from the property sector.