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China's gross domestic product (GDP) in the first quarter of 2024 increased by 5.3% compared to the same period in 2023, higher than analysts' previous forecast.
The figures are seen as good news for China as it tries to boost economic growth after difficulties in the real estate sector and rising local government debt.
The Chinese government has announced fiscal and monetary policy measures to achieve its GDP growth target of around 5% in 2024.
Jeff Ng, head of Asia macro strategy at SMBC in Singapore, said the GDP figures were not surprising given the steady economic momentum. Quarterly, GDP in the first quarter of 2024 grew 1.6%, higher than the forecast growth of 1.4%.
The world's second-largest economy has struggled to make a strong and sustainable recovery from the COVID-19 pandemic, weighed down by a prolonged slowdown in the real estate sector, rising local government debt and weak private sector spending.
Last week, Fitch downgraded China's sovereign credit rating outlook to negative and listed risks to public finances as the government spends more on infrastructure and high-tech manufacturing, while shifting away from the real estate sector.
The government is relying on infrastructure projects to help revive the economy as consumers are cautious about spending and businesses lack confidence to expand.
China’s consumer inflation was lower than expected in March, while producer price deflation continued, pointing to weak domestic demand and growing calls for stimulus to boost demand.
The world's second-largest economy has had a solid start to the year, but March data on exports, consumer inflation and bank lending signaled economic growth could falter again.
Against this backdrop, the People's Bank of China (PBoC, the central bank) has pledged to step up policy support for the economy this year.
