BEIJING (Reuters) – China’s economy grew more than expected in the first quarter, official data showed on Tuesday, welcome information for policymakers in Beijing trying to support growth amid a crisis in the manufacturing sector. real estate and heavy municipal debts.

Support measures, both financial and monetary policy, have been deployed by the Chinese government in order to boost the economy, which is struggling to recover firmly and sustainably from the COVID crisis.

Beijing wants to achieve growth of around 5% this year, a target that many analysts consider ambitious, estimating that the 2023 data were likely inflated by a post-COVID rebound following the lifting of broad health restrictions.

According to data released Tuesday from the National Bureau of Statistics (NBS), China’s gross domestic product (GDP) grew at an annual rate of 5.3 percent in the first quarter, while analysts polled by Reuters on average expected growth. of 4.6% after +5.2% in the fourth quarter of 2023.

On a quarterly basis, the Chinese economy recorded an increase of 1.6% over the January-March period, again beating the consensus which stood at +1.4%.

These data suggest that the stimulus measures deployed by Beijing are bearing fruit, while the world’s second largest economy is weakened by a crisis in the real estate sector, heavy municipal debts and weak private sector investment.

Fitch last week downgraded its credit outlook for China to negative, citing growing risks to the public finance outlook as the government continues to invest heavily in infrastructure and the production of cutting-edge technological products.

With this spending, Beijing intends to support the economy while consumers are more cautious in their spending and businesses more timid in their ambitions.

Consumer prices in the country rose again in March, while producer price deflation persisted, suggesting that domestic demand remained weak and fueling market calls for additional stimulus measures to revive the economy. request.

If the Chinese economy started the year well, March data on exports and inflation showed that this positive dynamic could falter again.

Data published on Tuesday, alongside GDP, also indicate a slowdown.

Industrial production increased in March by 4.5% over one year, while the consensus gave an increase of 6.0%, after +7.0% over the first two months of the year.

Moreover, retail sales, a key indicator of consumption, increased last month by 3.1% on an annual basis, slowing after the 5.5% increase recorded in January-February. Analysts on average expected an increase of 4.6%.

(Joe Cash and Kevin Yao; Jean Terzian)

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