China's economy grew faster than expected in March quarter

BEIJING, Apr 16 (Reuters): China's economy grew faster than expected in the first quarter, data showed on Tuesday, offering some relief to officials as they try to shore up growth in the face of protracted weakness in the property sector and mounting local government debt.
However, several March indicators released alongside the gross domestic product data - including property investment, retail sales and industrial output - showed that demand at home remains frail, weighing on overall momentum.
The world's second-largest economy grew 5.3per cent in January-March from the year earlier, official data showed, comfortably above a 4.6per cent analysts' forecast in a Reuters poll and up from the 5.2per cent expansion in the previous quarter. On a quarterly basis growth picked up to 1.6per cent from 1.4per cent in the previous three months.
"The strong first-quarter growth figure goes a long way in achieving China's 'around 5per cent' target for the year," said Harry Murphy Cruise, economist at Moody's Analytics.
Analysts have described as ambitious the growth target Beijing aims to accomplish with help of fiscal and monetary stimulus measures, noting last year's growth rate of 5.2per cent was likely flattered by a rebound from a COVID-hit 2022.
That bounce, however, fizzled away under the weight of the property downturn, rising local debt and weak consumer spending.
Beijing turned to the tried and tested spending on infrastructure and high-tech manufacturing to lift the economy. That however, raised concerns about public finances, prompting Fitch to cut its outlook on China's sovereign credit rating to negative last week.
While the quarterly GDP data showed the economy was off to a solid start this year, data on exports, consumer inflation, producer prices and bank lending for March showed that momentum could falter again, spurring calls for more economic stimulus.
Disappointing factory output and retail sales, released alongside the GDP report, also underlined the persistent weakness in domestic demand.
Industrial output in March grew 4.5per cent from a year earlier, below the 6.0per cent forecast and a gain of 7.0per cent for the January-February period.
Retail sales rose 3.1per cent year-on-year in March, missing the 4.6per cent growth forecast and slowing from a 5.5per cent gain in the January-February period.
Fixed asset investment grew an annual 4.5per cent over the first three months of 2024, versus expectations for a 4.1per cent rise. It expanded 4.2per cent in the January-February period.
"The headline number looks good... but I think the momentum is actually quite weak at the end," said Alvin Tan, head of Asia currency strategy at RBC Capital Markets in Singapore.
Prior to the data, analysts polled by Reuters expected China's economy to grow 4.6per cent in 2024, below the official target, but several banks raised their forecasts after the first-quarter numbers.
Economists at ANZ now see China's economy growing 4.9per cent this year, up from 4.2per cent previously, while economists at DBS Bank lifted their 2024 outlook to 5per cent from 4.5per cent.
Societe Generale raised its 2024 growth forecast to 5per cent from 4.7per cent, while Deutsche Bank now expects 5.2per cent growth, half a percentage point above its previous forecast.
Market showed muted reaction to the data.
Traders said China's state-owned banks were selling dollars to steady the yuan in the onshore market. China stocks were tracking broader markets lower as geopolitical tensions in the Middle East sapped risk sentiment.