China Reports Surprisingly Strong Growth Driven By Industry
GDP increased 5.3% in the January-to-March period from a year earlier, National Bureau of Statistics data showed.
(Bloomberg) -- China’s economic growth beat expectations in the first quarter as the industrial sector powered forward, although a tail-off in March activity signaled more support may be needed to sustain that momentum.
Gross domestic product increased 5.3% in the January-to-March period from a year earlier, data released by the National Bureau of Statistics showed Tuesday. That’s higher than the median estimate of 4.8% in a Bloomberg survey of economists and just above a growth rate of 5.2% in the final quarter of 2023. Growth in industrial production and retail sales was slower than expected.
“China data appears to be strong on the headline, but the details are weak. This would suggest that the economy needs more support, and markets will continue to position for a weak yuan,” said Charu Chanana, head of foreign-exchange strategy at Saxo Markets in Singapore.
China’s economic recovery has been unbalanced since the pandemic. Manufacturing is holding up, thanks to resilient overseas demand and Beijing’s focus on developing advanced technologies at home. A prolonged real estate downturn has weighed on household and business confidence, while factory prices have been in deflation for more than a year, reflecting anemic domestic demand as well as excess capacity in some industries.
The yuan narrowed earlier loss to trade 0.2% lower in the onshore market, after the PBOC loosened grip on the Chinese currency with the daily reference earlier on Tuesday. It rose 0.1% in the onshore market after the GDP data beat estimate. The yield on the 10-year benchmark government bond was little changed at 2.28%.
“The national economy got off to a good start in the first quarter with more positive factors accumulating, setting a relatively good foundation to realize the annual goals and tasks,” the National Bureau of Statistics said in a statement accompanying the release on Tuesday.
China’s growth target for this year is around 5%. Many economists say the government will have to take more action to stabilize the property market, and encourage consumers to spend, in order to hit the goal.
Investors are closely watching one major government effort to boost domestic demand this year: a trade-in program that will encourage businesses to upgrade their machinery and households to buy new cars, refrigerators or washing machines. Shares of Chinese home-appliance makers jumped last week after officials vowed “strong” fiscal support for the plan.
--With assistance from Shikhar Balwani and Iris Ouyang.
(Updates with NBS statement, more details throughout)
More stories like this are available on bloomberg.com
©2024 Bloomberg L.P.