Q1 GDP Growth Outperforms Forecasts
The National Bureau of Statistics reported a 4.5% year-on-year GDP growth in the first three months of the year, surpassing the 2.9% growth in the previous quarter and beating analyst predictions of a 4.0% increase.
Investors Monitor Post-COVID Recovery
Investors have kept a close eye on first-quarter data, looking for signs of strength in the recovery after Beijing relaxed COVID restrictions in December and eased a three-year crackdown on tech firms and property.
China's Growth Target Remains Intact
Matt Simpson, a senior market analyst at City Index, stated that the Q1 figures keep China on track for its 5% growth target this year. However, there are concerns that the Q1 data represents an initial boost from reopening, and momentum may need to be faster in Q2 or Q3.
Uneven Recovery and Doubts About Demand
China's recovery has been uneven, with improvements in consumption, services, and infrastructure spending, but slowing prices and increasing bank savings raise concerns about demand.
Q1 Quarter-on-Quarter GDP Growth
On a quarter-on-quarter basis, GDP grew 2.2% in January-March, meeting analyst expectations and rising from a revised 0.6% increase in the previous quarter.
Chinese Policymakers Pledge Economic Support
Chinese policymakers have promised to increase support for the $18 trillion economy this year to control unemployment. However, concerns about debt risks and structural issues limit their options.
Central Bank's Stance on Liquidity and Growth
China's central bank would maintain ample liquidity, stabilize growth and jobs, and focus on expanding demand.
Predictions for 2023 Economic Growth
Analysts expect China's growth in 2023 to accelerate to 5.4%, up from 3.0% last year. The government has set a modest target of around 5% for this year after significantly missing the 2022 goal.
March Activity Data Shows Improving Retail Sales
Data released Tuesday showed retail sales growth accelerated to 10.6% in March, exceeding expectations and reaching a nearly two-year high. Factory output growth also increased but was slightly below expectations.
Fixed Asset Investment Slows Down
Fixed asset investment growth in January-March slowed to 5.1% year-on-year, below the expected 5.7% increase. It had grown 5.5% in the January-February period.
Concerns About Economic Recovery Strength
Wen Bin, the chief economist at China Minsheng Bank, noted that current market worries about deflation reflect concerns about the strength and sustainability of the economic recovery. While the production side has returned to pre-pandemic levels, demand-side momentum remains weak.