First-quarter GDP grows 5.3 per cent year-on-year

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An employee checks intelligent manufacturing equipment at a tech company in Ganzhou, Jiangxi province (ZHU HAIPENG / FOR CHINA DAILY)

China’s economy grew more strongly than expected in the first quarter though pressures and challenges from insufficient demand persist, bolstering the case for more policy stimulus to consolidate the recovery trend.

Officials and analysts said policymakers are likely to introduce more supportive measures for the real economy to grow and to restore consumer confidence and tackle property woes. Potential moves include increasing support to bolster emerging industries, as well as for completing unfinished pre-sold homes and allocating more resources to support household spending, they said.

Projections indicate a potential acceleration in China’s GDP growth in the second quarter, given the low comparison base. However, analysts cautioned that strong stimulus efforts must persist, and they called for continued fiscal and monetary support in the coming months.

China’s GDP grew 5.3 per cent year-on-year in the first quarter of this year, the National Bureau of Statistics said.

Sheng Laiyun, deputy head of the bureau, said that strong performance was led by a notable improvement in industry and services.

China’s value-added industrial output rose 6.1 per cent year-on-year in the first quarter, after rising 4.6 per cent last year, the bureau said. Fixed-asset investment rose 4.5 per cent in the first three months year-on-year, and the value of retail sales rose 4.7 per cent in the same period.

“The economy will continue the recovery trend, underpinned by global economic recovery, stepped-up policy support and the anticipated strong holiday business,” Sheng said.

China’s housing market is still being adjusted, he said, and more will be done to increase support for the development of the real economy, foster emerging industries and boost consumer confidence.

Lu Ting, chief China economist at Nomura, said that while China’s first-quarter real GDP growth beat expectations, March activity figures were well below expectations.

“Activity data may drop further from March on weak momentum. Some sectors, especially exports, may hold up relatively well on falling prices and robust external demand.”

The country may adopt more forceful measures to deal with the property woes in coming months, especially regarding support for completing unfinished pre-sold homes, he said.

China’s economy is affected by the downturn in its property sector, the International Monetary Fund’s latest World Economic Outlook said. China’s economy will grow 4.6 per cent this year, unchanged from the previous forecast in January, the IMF forecast.

Louise Loo, lead economist at the British think tank Oxford Economics, said her team expects government bond issuance to pick up in the third quarter.

Despite fluctuations last month, Zhou Maohua, a researcher at China Everbright Bank, said he believes the economy is well on track for a steady recovery in the coming months, given the continued recovery in industrial production and investment and the gradual improvement in consumption.

China “still has ample policy space to bolster the world’s second-largest economy”, he said.

On the monetary front, Huang Yiping, dean of the National School of Development at Peking University, said the United States Federal Reserve may cut the policy rate this year, which “should also create more room for the People’s Bank of China to ease monetary policy if it wants to”.