China’s economy grew at a surprising rate in the first quarter of 2024

China’s economy grew at a surprising rate in the first quarter of 2024

China’s economy grew stronger than expected earlier this year, mainly thanks to strong growth in high-tech manufacturing.

Gross domestic product rose 5.3% in the first quarter from a year ago, the National Bureau of Statistics said on Tuesday. That beat the 4.6% growth estimate from a Reuters poll of economists. It also marked an acceleration from the 5.2% growth in the previous three months.

“China’s economy got off to a good start in the first quarter … laying a good foundation for achieving the goals for the rest of the year,” Sheng Laiyun, a spokesman for the NBS, said at a press conference in Beijing accompanying the data release.

But he admitted that “the basis for economic stability and improvement is not yet solid.”

Industrial production jumped 6.1% in the first quarter from a year ago, mainly due to strong growth in high-tech manufacturing.

In particular, production of 3D printing equipment, charging stations for electric vehicles and electronic components all jumped about 40% compared to the previous year. Last month, an official survey showed China’s manufacturing purchasing managers’ index (PMI) expanded for the first time in six months. The Caixin/S&P manufacturing PMI, a privately conducted survey, also hit its strongest reading in more than a year, as overseas demand picked up.

China has set an annual growth target of around 5% for 2024, which many analysts consider ambitious, as consumer and business confidence remain weak and the property sector is mired in a prolonged slump.

Authorities have cut interest rates this year to boost bank lending and accelerate central government spending to support infrastructure investment.

Tuesday’s data showed retail sales rose 4.7% in the January to March period, boosted by spending in sports and entertainment activities, cigarettes and alcohol, and catering services.

Investment in fixed assets — such as factories, roads and the power grid — rose 4.5% over the same period.

But the growth was mainly supported by state-owned enterprises, which invested 7.8% more in the first quarter than a year ago. Investment by the private sector only increased by 0.5%.

Investment by foreign companies plunged by 10.4% in the first quarter.

Beijing has made restoring economic growth a top priority for this year and has renewed its efforts to attract foreign investors.

Last month, Chinese leader Xi Jinping met with more than a dozen US CEOs and academics in Beijing and invited them to “continue to invest in China.” He expressed confidence that the country will maintain healthy and sustainable growth in the coming months.

China’s economy grew 5.2% in 2023. While this expansion marks a significant improvement over 2022, when China’s economy grew just 3% amid intense restrictions and coronavirus disruptions, it is still one of the country’s worst economic performances in more than three decades. .

Foreign direct investment in China has slumped in recent months as a combination of slower growth, regulatory crackdowns, burdensome national security legislation and questions about the country’s long-term prospects have shaken confidence in the world’s second-largest economy.