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China Crushes Economic Forecasts with Impressive Q1 Performance

 

Daily BBC

China's economy started the year stronger than projected, despite a worsening property problem.

According to official figures, the gross domestic product (GDP) increased by 5.3% in the first three months of 2024 compared to the previous year.

This exceeded estimates that the world's second largest economy's growth rate would decrease to 4.6% in Q1.

Last month, Beijing announced an ambitious yearly growth target of "around 5%" for the world's second largest economy.

Data from the National Bureau of Statistics (NBS) also indicated that first-quarter retail sales growth, a crucial indicator of Chinese consumer confidence, dipped to 3.1%.

"You cannot manufacture growth forever, so we really need to see households come to the party if China wants to hit that around 5% growth target," Moody's Analytics' Harry Murphy Cruise told the BBC.

During the same year, property investment declined 9.5%, underlining the hurdles that China's real estate industries confront.

The numbers came as China grappled with an ongoing housing market turmoil. According to the International Monetary Fund (IMF), the sector represents around 20% of the GDP.

The most recent statistics also indicated that new house prices decreased at the highest rate in more than eight years in March.

The real estate industry's dilemma was underscored in January when a Hong Kong court ordered property company Evergrande to dissolve.

Rival developers Country Garden and Shimao have also received winding-up petitions in the city.

Last week, credit rating firm Fitch downgraded China's outlook, citing rising financial risks as the government faces economic headwinds.

At the annual summit of China's leaders in March, officials announced that the economy will grow by 5.2% in 2023.

For decades, the Chinese economy grew at a rapid pace, with official numbers indicating that GDP increased by about 10% per year on average.