A performance better than expected despite the difficulties: China announced on Tuesday an increase in its GDP of 5.3% in the first quarter, at a time when an unprecedented real estate crisis and lackluster consumption are exacerbated by economic uncertainties .
A group of experts interviewed by AFP expected growth of 4.6% on average. Beijing has set a target of “around 5%” this year, far from the double-digit increases of recent decades.
This pace, which would be the envy of most major economies, would nonetheless be the lowest for China since 1990 (3.9%), excluding the COVID period.
In the first quarter, “the Chinese economy continued its momentum and got off to a good start” this year, Sheng Laiyun, a spokesperson for the National Bureau of Statistics (NBS), told the press, assuring that the government measures to support growth were “producing their effects”.
However, compared to the fourth quarter of 2023, a more accurate comparison of the economic situation, GDP is growing more modestly (+1.6%).
Eminently political and subject to doubt, the official GDP figure nevertheless remains highly scrutinized, given the weight of the country in the world economy.
The growth figures are published at a time when some economists are concerned about the trajectory of the world’s second largest economy.
On Wednesday, rating agency Fitch downgraded China’s sovereign debt outlook to negative, citing increased risks to the country’s public finances amid a “more uncertain economic outlook.”
A reassuring figure but…
“The strong growth of the first quarter reassures the government about its trade-offs” in terms of the economy, estimates analyst Zhiwei Zhang, from the Pinpoint Asset Management firm, while many economists are instead advocating a vast support plan.
The long-awaited rebound after the lifting of COVID-19 health restrictions was brief and petered out last year.
The recovery is particularly hampered by sluggish confidence among households and businesses in a context of uncertainty, which is penalizing consumption.
In March, retail sales, the main indicator of household spending, fell (+3.1% over one year), after an increase of 5.5% in January and February combined.
This performance is lower than the expectations of analysts surveyed by the Bloomberg agency (5.4%).
Industrial production also ran out of steam in March (+4.5% year-on-year), after an increase of 7% at the start of the year. Bloomberg estimates were forecasting a slowdown (6.6%).
In the first quarter, “consumption and investment in housing were the main brakes” on growth, economist Dan Wang of the Hong Kong bank Hang Seng told AFP.
Real estate has long represented in the broad sense more than a quarter of China’s GDP and constituted an important source of employment.
But this key sector is now under pressure, with certain developers on the verge of bankruptcy (Evergrande, Country Garden, etc.) and falling prices which are dissuading the Chinese from investing in real estate.
Beijing’s support measures for the sector have so far had little effect.
Uneven recovery
In the first quarter, investments in real estate fell year-on-year (-9.5%), according to the National Bureau of Statistics.
Logically, the main cities of China again recorded a drop in property prices in March.
Out of 70 cities which make up the official reference indicator, 58 were thus concerned (compared to 51 in March 2023, a sign of deterioration of the situation), according to figures from the BNS.
Since 2020, real estate has suffered from a tightening by Beijing of the conditions of access to credit for real estate developers, in order to reduce their debt.
The recovery in China is disparate, with sectors benefiting, such as services, driven by the return of customers to restaurants, transport and tourist attractions.
But others remain struggling due to weak domestic demand.
This situation plunged China into deflation for six months.
The country has been out of this since February, but the price increase was almost zero in March (+0.1% year-on-year), unlike the main economies which saw prices soar again.