China’s economy expanded by a better-than-expected 5.3% in the first quarter, keeping the country on track to meet its growth target for the year despite challenges from a property downturn and sluggish domestic demand.
The closely watched gross domestic product (GDP) growth beat the 4.9 per cent increase estimated by economists surveyed by Chinese financial data provider Wind, and was up from 5.2 per cent in the fourth quarter of last year. China’s economy grew 1.6 per cent in the first three months of the year from the previous quarter, compared with a 1.2 per cent increase in the previous three months.
“The figures were driven by rapid growth in the services sector, as well as rising overseas demand supporting export growth in the industrial sector,” said Ding Shuang, Greater China economist at Standard Chartered Bank.
“Potential trade tensions in the West, including additional tariffs, are a major obstacle, especially as the US has recently blamed China for its overcapacity problems. This is a challenge for China’s trade sector,” he added.
Retail sales rose 3.1 per cent in March from a year earlier, compared with 5.5 per cent growth in January and February combined, the National Bureau of Statistics said on Tuesday.
Beijing has pinned high hopes on consumption to accelerate and consolidate the economic recovery this year, but retail sales rose 0.26 per cent month-on-month from February.
Industrial output rose 4.5 per cent in March from a year earlier, below the 5.3 per cent increase forecast in a survey by Wind. Fixed asset investment grew by 4.5 per cent year-on-year in the first three months, up from 4.2 per cent in the first two months of the year.
Real estate investment, which had a significant impact on GDP growth last year, fell by 9.5 per cent year-on-year in the first quarter, compared with 9 per cent in the first two months of the year.
Meanwhile, private investment, an indicator of investor confidence, rose by 0.5 per cent in the first three months of the year.
The overall urban unemployment rate was 5.2 per cent in March, down from 5.3 per cent in the first two months of the year.
Beijing has set its annual growth target at “around 5 per cent”. Standard Chartered Bank’s Ding estimates that China’s economy will grow 4.8 per cent this year due to difficulties in the second half.
