Manufacturing leads China’s economy to strong start to 2024

The latest official data published by Beijing shows the Chinese economy making a stronger-than-expected start to 2024, with GDP expanding by 5.3% in Q1 compared to 2023.

This puts China on track to achieve its growth target of around 5% as revealed by Premier Li Keqiang during the Two Sessions in March. Nevertheless, the National Bureau of Statistics acknowledged that the “external environment is becoming more complex”, posing a threat to stable economic growth. Last year, the Chinese economy grew 5.2%.

Some analysts have attributed to the Q1 growth to industry, with industrial production up 6.1% compared to a year ago, boosted by strong growth in high-tech manufacturing for products such as electric vehicle (EV) charging stations and batteries. Chinese automakers have stepped up expansions into new overseas markets, with BYD alone exporting over 240,000 cars in 2023, according to Reuters.

Disappointing retail sales – despite two major national holidays in this period –show that China is still experiencing weak domestic demand. This is likely caused by the ongoing crisis in the property sector.

New home prices fell at the fastest rate in more than eight years in March, and sales fell 23.7%. The scale of the crisis was underlined in January when a Hong Kong court ordered the liquidation of the world’s most indebted developer, China Evergrande Group.

Economists told the Financial Times that since growth is in line with official targets, further economic stimulus measures are unlikely, but others say that more stimulus is still needed to shore up demand.