China's economy grows at 5.3% in first quarter amid property market downturn

China Q1 GDP growth: China's economy kicked off 2024 with stronger-than-expected growth, expanding at a rate of 5.3 per cent in first quarter despite ongoing challenges in its property market and looming tre tensions with West.

Data released by National Bureau of Statistics (NBS) revealed that country's gross domestic product (GDP) reached 29.63 trillion yuan (about $4.17 trillion) in first three months of year, representing a notable acceleration from 5.2 per cent growth recorded in 2023. This performance indicates that China is on track to meet government's target of around five per cent GDP growth for year.

During a press conference, Sheng Laiyun, Deputy He of NBS, attributed robust economic expansion to various positive factors, including rising production demand, stable employment, and growing market confidence. He highlighted resilience of China's high-quality development, noting that economy has sustained its recovery momentum and started year on a solid footing.

GDP growth was mainly driven by a rebound in industrial sector and improvements in service sector, according to Sheng. However, he refrained from dressing ongoing crisis in property sector, which accounts for a significant portion of China's economy. Home prices have been declining, and property investment fell by 9.5 per cent during same period, underscoring challenges faced by real estate firms in country.

Analysts, such as Harry Murphy Cruise from Moody's Analytics, stressed on importance of household consumption in sustaining China's growth trajectory. Cruise warned that relying solely on manufacturing growth is not sustainable in long run and urged for increased consumer participation to achieve growth targets.

real estate industry crisis came into spotlight in January when property giant Evergrande was ordered to liquidate by a Hong Kong court. Or major developers, including Country Garden and Shimao, have also faced financial difficulties, furr exacerbating concerns about stability of China's property market.

ding to economic challenges, Fitch Ratings recently downgred its outlook for China's state-owned banks from stable to negative. downgre reflects increasing risks to country's financial stability and underscores doubts about Beijing's ability to support its largest lenders amid economic hewinds.

Despite se challenges, first-quarter growth was fuelled by rapid expansion in services sector and strong export growth in industrial sector, according to Ding Shuang, chief Greater China economist at Standard Chartered Bank. However, Shuang warned of potential tre friction with West, including possibility of ditional tariffs, particularly as United States has accused China of overcapacity issues.

(With PTI inputs)