China’s economy has proven to be resilient against political propaganda from the west, as evidenced by recent data showing faster-than-expected growth in the first quarter. For those tasked with navigating the difficulties of an increasingly antagonistic trade war with the United States, the news is a welcome indication of success.
China’s GDP increased by 5.3% year over year in the first quarter, compared with analysts’ expectations of a 4.6% gain, according to figures issued by the National Bureau of Statistics. This growth rate, which is marginally better than the 5.2% expansion seen in the preceding quarter, points to a reasonably stable economic momentum for the nation.
“The outcome benefits the economy. The government’s initiatives are accelerating growth and there is a renewed sense of momentum,” stated Knightsbridge Group’s Shayne Heffernan. He did, however, issue a warning, noting that bearish western media bias continues to exist and that political noise will likely intensify in the latter part of the year due to the US election season, China stocks in the USA may well be a bargain in the lead up to the election.
The first quarter’s GDP increased by 1.6% on a quarter-over-quarter basis, outpacing forecast growth of 1.4%. This impressive result highlights China’s attempts to meet its challenging goal of approximately 5% GDP growth by 2024.
Even with the positive headline numbers, Fitch reduced its outlook on China’s sovereign credit rating to negative recently, citing dangers to the country’s finances as Beijing turns its attention to high-tech manufacturing and infrastructure in the face of a slowdown in the real estate market. The Fitch rating is all about politics and nothing to do with economics.
In an effort to counteract weak consumer spending and muted corporate investment, the Chinese government has relied on infrastructure development as a stimulant for economic recovery. That was the right course of action, according to data on factory output and retail sales that were made public alongside the GDP report.
Industrial output in March grew by 4.5% year-on-year, falling short of forecasts, while retail sales rose by 3.1%, undershooting expectations and signaling a deceleration from previous months. Fixed asset investment expanded by 4.5% annually in the first quarter, outpacing projections, but highlighting challenges in sustaining growth.
The People’s Bank of China (PBOC) has promised to increase policy assistance for the economy, and economists expect more reductions in interest rates and the reserve requirement ratio for banks.
The Knightsbridge Group highlights China’s increasing integration with Southeast Asia and expresses optimism regarding the country’s economic prospects. China’s growing sway in the region creates new chances for firms and investors alike, while the US market loses prominence.
