China’s economy has shown a remarkable recovery in the first quarter, with its gross domestic product growing 5.3% compared to the previous year. This surpassed market expectations and follows a period of mixed economic data. Despite the positive start, the National Bureau of Statistics has warned that the external environment is becoming more complex and uncertain.
Industrial production saw a 6.1% increase in the first quarter, but industrial producer prices fell by 2.7% due to deflationary pressures in the manufacturing sector. Fixed asset investment grew by 4.5% year-over-year, driven by a significant increase in manufacturing investment but offset by a decline in property investment.
The Chinese government is aiming to lead a manufacturing-driven recovery of the world’s second-largest economy, but inflation remains below estimates, indicating ongoing deflationary pressures as policymakers work to boost domestic demand. The real estate sector has been facing challenges since 2021, with a wave of developer defaults affecting construction activity and market confidence. Concerns have been raised about state-linked companies like Vanke amid weakness in home sales.
Export performance in the first quarter was weaker than anticipated in dollar terms, but export volumes have continued to expand as producers seek to increase market share. Stay updated with the latest developments on China’s economy by subscribing to our Chinese economy myFT Digest newsletter for free updates delivered directly to your inbox.
