China’s economic growth outpaced expectations in the first quarter of 2024, despite the ongoing challenges in its property market. Official data reveals that the gross domestic product (GDP) expanded by 5.3% compared to the same period last year, surpassing forecasts of a 4.6% growth slowdown.
Last month, Beijing set an ambitious annual growth target of “around 5%” for the world’s second-largest economy. However, first-quarter retail sales growth dipped to 3.1%, underscoring the importance of consumer confidence in achieving this target.
Meanwhile, property investment dropped by 9.5% during the same period, shedding light on the hurdles faced by China’s real estate sector. The property market crisis has been a focal point, particularly after the court-ordered liquidation of Evergrande in January, followed by challenges faced by other major developers.
Despite these challenges, the property sector remains a significant contributor to China’s economy, accounting for approximately 20% of its GDP, according to the International Monetary Fund (IMF).
However, signs of strain persist, with new home prices experiencing the fastest decline in over eight years in March. Credit ratings agency Fitch recently revised its outlook for China downwards, citing mounting financial risks amid economic headwinds.
China’s leaders addressed the economic landscape at their annual gathering in March, reporting a 5.2% growth in 2023. While the economy has historically maintained rapid expansion, averaging close to 10% annual GDP growth for decades, the current landscape presents new challenges that require careful navigation. Stay tuned for further updates on China’s economic trajectory.
