China’s economy got off to a stronger-than-expected start this year, despite deepening troubles in its property sector.
Official figures show that in the first three months of 2024, the country’s gross domestic product (GDP) grew by 5.3% compared to the same period last year.
This performance exceeded expectations, as there were concerns that the world’s second-largest economy might see growth slow to 4.6% in the first quarter.
Last month, Beijing set an ambitious annual growth target of “around 5%” for China’s economy.
Data from the National Bureau of Statistics (NBS) also revealed that retail sales growth, a key indicator of consumer confidence, dropped to 3.1% in the first quarter.
“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,” said Harry Murphy Cruise from Moody’s Analytics to the BBC.
During the same period, property investment fell by 9.5%, underscoring the challenges faced by China’s real estate companies.
These figures come amid an ongoing crisis in China’s property market, which according to the International Monetary Fund (IMF), makes up about 20% of the economy.
The latest data also showed that in March, new home prices fell at the fastest pace in more than eight years.
The real estate industry crisis came into focus in January when property giant Evergrande was ordered by a Hong Kong court to liquidate. Rival developers Country Garden and Shimao have also faced winding-up petitions in the city.
Last week, Fitch, the credit ratings agency, lowered its outlook for China, citing increasing risks to the country’s finances due to economic challenges.
During the annual gathering of China’s leaders in March, officials said the economy had grown by 5.2% in 2023.
For decades, the Chinese economy has been expanding at a remarkable rate, with official figures showing GDP growth averaging close to 10% annually.
