China’s economic growth beats projections

China’s economy surpassed expectations with faster-than-anticipated growth in the first quarter of the year, providing a much-needed lift for policymakers contending with challenges such as a property-sector crisis, subdued consumer demand, and escalating government debt.

According to data released by the National Bureau of Statistics (NBS) on Tuesday, gross domestic product (GDP) expanded by 5.3 percent in the first quarter, comfortably exceeding forecasts and up from a 5.2 percent expansion in the previous quarter.

Sector-wise, industrial production and agriculture registered growth rates of 6.1 percent and 3.8 percent, respectively, while services grew by 5 percent, as per the NBS data.

The NBS attributed the robust performance of the economy to the effective implementation of policies under the leadership of the Central Committee of the Communist Party of China and President Xi Jinping. The agency noted that stable production and demand, along with improvements in employment and prices, contributed to market confidence and advancements in high-quality development.

The stronger-than-expected growth figures follow recent data showing a decline in China’s exports and imports by 7.5 percent and 1.9 percent, respectively, in March, falling short of expectations.

Despite the positive growth momentum, China continues to grapple with persistent challenges, including a heavily indebted real estate sector and a shrinking population. Fitch Ratings recently downgraded China’s sovereign credit outlook to negative, citing mounting risks to the country’s public finance outlook as Beijing endeavours to transition away from real estate-driven growth.

Beijing has set a growth target of 5 percent for 2024, which, while surpassing that of most developed economies, represents one of China’s slowest expansions since 1990. In response to economic challenges, officials have unveiled fiscal and monetary policy measures, including substantial spending on major construction and infrastructure projects totalling $1.8 trillion, aimed at stimulating economic growth.