Instant view: China’s economy grew 4.5% year-on-year in Q1, above expectations

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by Reuters

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Instant view: China’s economy grew 4.5% year-on-year in Q1, above expectations

(Reuters) - China's economy grew at a faster-than-expected clip in the first quarter, official data showed on Tuesday, expanding 4.5% year-on-year, as policymakers move to bolster growth following the end of strict COVID-19 curbs in December.

Analysts polled by Reuters had expected gross domestic product (GDP) to expand 4.0% from a year earlier, quickening from 2.9% in the fourth quarter.

On a quarter-by-quarter basis, GDP grew 2.2% in January-March, data released by the National Bureau of Statistics showed, compared with expectations for a 2.2% increase and a revised 0.6% rise in the previous quarter.

* Jan-March fixed asset investment +5.1% y/y (f'cast +5.7%, Jan-Feb +5.5%)

* Jan-March property investment -5.8% y/y (Jan-Feb -5.7%)

"On net, that's a decent set of figures out from China in Q1, which keeps them on track for their growth target of around 5% this year."

"It has helped lift sentiment to a degree in Asia... but the slightly lacklustre response suggests there are some lingering concerns that Q1 data is the initial thrust thanks to the reopening, and that its momentum could fade in Q2 or Q3."

"On balance quite an encouraging report, with retail sales, GDP and property sales coming in higher than expected...reinforces the story that recovery momentum post-pandemic remains intact."


"High-end consumption gives us a bit surprise but overall weak recovery story remains intact."

"Should overall consumption weakens in Q2, the PBOC may consider mildly cutting policy rate one time. It is data dependant."

* China's economy is expected to grow 5.4% in 2023, according to a Reuters poll of analysts. Last year, it grew 3.0% in one of its worst performances in nearly half a century due to strict COVID-19 curbs.

* The world's second-largest economy is staging a gradual but uneven recovery, led by consumption, services and infrastructure.

* However, slowing inflation and surging bank savings raise doubts over the strength of a pick-up in domestic demand.

* Policymakers have pledged to step up support for the economy, which is rebounding after disruptions caused by a sudden lifting of COVID-19 curbs in December.

* Policymakers will likely rely on a mix of modest monetary easing and infrastructure spending, alongside efforts to bolster the property sector.

* The government has set a modest target for economic growth of around 5% for this year, after badly missing the 2022 goal.

* China's exports unexpectedly surged in March, but analysts cautioned the improvement partly reflects suppliers catching up with unfulfilled orders after last year's COVID-19 disruptions.

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