The National Bureau of Statistics in Beijing on Tuesday reported an increase in economic output of 5.3 percent in the first quarter. Experts only expected growth of 4.6 percent. The Chinese government aims for a growth rate of five percent annually; Aside from the coronavirus years, this would be the lowest since statistics began more than 30 years ago.
The crisis in the construction sector weighs on the Chinese economy
“The Chinese economy continues its upward trend and is off to a good start,” said a spokesperson for the statistics office. The government's measures to promote growth “are having an impact.” In fact, weak domestic and external demand, as well as the crisis in the Chinese construction sector, are causing problems for the world's second largest economy.
Rating agency Fitch recently downgraded the outlook for China's creditworthiness development. It cited “increasing risks to China's public finances” due to the more uncertain economic outlook. Weak figures were also reported recently for the export economy, which performed worse than expected in March.
There was disappointing data from retail and industry on Tuesday. Retail sales rose just 3.1 percent year-on-year in March, compared with 5.5 percent in the first two months of the year. Industrial production rose 4.5 percent, compared with seven percent in January and February.
Doubts about the importance of growth figures
As for the other indicators, some observers also have doubts about the GDP figures. “There are two readings of the full set of numbers: China's surprising real GDP growth is unsustainable or China's surprising real GDP growth is false,” said Derek Scissors of the American Enterprise Institute.
The Chinese government has been trying for months to stimulate economic growth with specific measures. Many experts consider this insufficient and favor a large-scale economic stimulus package. However, the relatively good growth figures for the first quarter should encourage Beijing's leaders to maintain their previous strategy.
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