China's First-Quarter Economic Growth Exceeds Expectations, But Concerns Linger (AI Translation)
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文｜财新周刊 于海荣
By Caixin Weekly's Yu Hairong
尽管2024年前两个月经济数据表现亮眼和3月国家统计局采购经理人指数（PMI）大幅跃升，已经让市场调高了对一季度经济增长的预期，但最终公布的数据还是超出预期。
Despite the impressive economic data from the first two months of 2024 and a significant leap in the Purchasing Managers' Index (PMI) reported by the National Bureau of Statistics in March, which led market analysts to raise their forecasts for first-quarter economic growth, the final figures still exceeded expectations.
国家统计局4月16日公布的数据显示，经初步核算，2024年一季度国内生产总值（GDP）为296299亿元，按不变价格计算，同比增长5.3%，增速较2023年四季度提高0.1个百分点，明显高于财新调查4.9%的预测均值。从调整季节因素后的环比看，一季度GDP增长1.6%，高于2023年四季度0.4个百分点，显示经济回升向好。
According to data released by the National Bureau of Statistics on April 16, preliminary calculations show that China's Gross Domestic Product (GDP) for the first quarter of 2024 amounted to 29.6299 trillion yuan. Calculated at constant prices, this represents a year-over-year increase of 5.3%, which is a 0.1 percentage point rise from the growth rate in the fourth quarter of 2023 and significantly exceeds the Caixin survey forecast average of 4.9%. On a seasonally adjusted quarterly basis, first-quarter GDP grew by 1.6%, up by 0.4 percentage points from the fourth quarter of 2023, indicating a positive economic rebound.
“一季度经济运行指标数据确实表现得不错。”国家统计局副局长盛来运在当日国新办发布会上用“持续回升、起步平稳、稳中求进、开局良好”四个关键词来评价一季度经济运行。他强调，GDP增长5.3%是符合实际的，从核算的角度看，主要由工业回升、服务业向好共同带动，二者对GDP增长的贡献超过90%，而且这一增速与用电量、货运量、港口货物吞吐量等实物量指标的增长情况相匹配。
"The economic performance indicators for the first quarter indeed showed good results," said Sheng Laiyun, Deputy Director of the National Bureau of Statistics, at a press conference held by the State Council Information Office. He described the first-quarter economic performance with four key phrases: "continuous recovery, stable start, steady progress, and good beginning." He emphasized that the 5.3% GDP growth is realistic and, from an accounting perspective, was primarily driven by a rebound in industry and improvements in the service sector. Together, these sectors contributed more than 90% to GDP growth. Moreover, this growth rate aligns with increases in physical volume indicators such as electricity consumption, freight volume, and port throughput.
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- China's GDP in Q1 2024 exceeded expectations with a growth rate of 5.3%, slightly higher than the last quarter of 2023 and above the forecasted average of 4.9%. This growth was driven mainly by improvements in the industrial and service sectors, contributing over 90% to the GDP increase.
- Despite robust economic performance at the start of the year, concerns remain about slowing macroeconomic indicators in March, such as industrial production and retail sales, which were below market expectations. However, fixed asset investment showed significant improvement.
- Major financial institutions like Morgan Stanley, Goldman Sachs, and UBS have revised their forecasts for China's annual economic growth upwards due to stronger-than-expected export growth. The IMF is also considering revising its growth projections for China following these positive results.
Despite strong economic indicators in early 2024, China's first-quarter GDP growth of 5.3% still surpassed expectations, showing a slight increase from the previous quarter and outperforming the forecasted 4.9% [para. 1]. This growth was driven mainly by rebounds in industry and improvements in the service sector, contributing over 90% to the GDP increase [para. 2]. Key financial institutions have subsequently revised their annual growth predictions for China upwards, influenced by better-than-expected export performance projections [para. 3].
The International Monetary Fund (IMF) is considering revising its growth forecast for China after the first-quarter figures exceeded their predictions. However, concerns remain about the persistent weaknesses in China's real estate market, which could dampen economic prospects [para. 4]. Despite a robust start to the year, some of China’s March indicators like industrial output and retail sales underperformed against market expectations, hinting at potential economic slowdowns due to high comparison bases from 2023 [para. 5].
A notable trend is the discrepancy between nominal and real GDP growth rates; with nominal growth lagging behind real growth for four consecutive quarters due to price effects from structural adjustments. This has implications for business revenue and government fiscal income since they are tied to nominal GDP [para. 6][para. 7].
The real estate sector continues to struggle with declining construction and sales figures worsening compared to 2023. There is a strong market call for increased policy intervention to stabilize this sector and mitigate systemic risks [para. 8]. Additionally, disposable financial resources have tightened in some areas, potentially disrupting economic recovery if not managed carefully [para. 9].
From an industry perspective, the secondary sector led Q1’s economic acceleration. The industrial sector alone contributed significantly to GDP growth thanks to enhanced business confidence spurred by supportive policies and positive demand shifts [para. 10]. On the demand side, exports were a major driver of Q1’s economic outperformance, with significant contributions from net exports strengthening overall GDP growth [para. 11].
Despite these positive developments, there are signs of uneven economic recovery across different sectors and regions. The consumer goods manufacturing sector showed signs of rebounding domestic demand but still lagged behind larger-scale industrial output. Service consumption outpaced goods consumption significantly due to strong cultural and tourism demand [para. 12].
Private investment grew modestly but remained below overall investment growth rates when excluding real estate development investments. Emerging industries like high-tech manufacturing showed robust performance while traditional sectors linked closely with real estate experienced declines [para. 13].
In summary, while China's economy started strong in 2024, underlying challenges such as real estate weaknesses, uneven recovery across sectors, and discrepancies between nominal and actual growth rates pose risks that need careful policy management going forward. The focus remains on implementing existing policies effectively while monitoring evolving economic conditions closely to ensure sustained recovery momentum [para. 14].
- Morgan Stanley
摩根士丹利 - Summary： Morgan Stanley, along with other financial institutions like Goldman Sachs and UBS, raised its forecast for China's annual economic growth rate. Initially predicting a 4.2% growth, Morgan Stanley adjusted its expectation to 4.8% following strong economic performance in the first quarter of 2024, particularly due to China's exports potentially outperforming expectations.
- Goldman Sachs
高盛 - Summary： Goldman Sachs, along with other financial institutions like Morgan Stanley and UBS, raised its forecast for China's annual economic growth rate in response to strong economic performance in early 2024. Initially predicting a growth of 4.8%, Goldman Sachs adjusted its forecast to 5% after observing China's robust export growth and other positive economic indicators.
- UBS
瑞银 - Summary： UBS, along with other financial institutions like Morgan Stanley and Goldman Sachs, raised its forecast for China's annual economic growth rate following strong economic performance in the first quarter of 2024. UBS increased its projection from 4.6% to 4.9%. This adjustment was mainly due to China's export growth, which was significantly stronger than expected.
- Ping An Securities
平安证券 - Summary： Ping An Securities' chief economist, Zhong Zhengsheng, mentioned that the gap between nominal and real GDP growth rates indicates that companies are not profiting from revenue increases, which also intensifies fiscal pressure on local governments. This situation is exacerbated by the continuous low fluctuation of the Producer Price Index (PPI), which is unfavorable for initiating industrial inventory cycles.
- Huatai Securities
华泰证券 - Summary： The article does not provide specific information about Huatai Securities. It focuses on China's economic performance in the first quarter of 2024, discussing various economic indicators and contributions from different sectors, as well as policy responses and expectations from financial institutions regarding future economic trends.
- Guangfa Securities
粤开证券 - Summary： Guangfa Securities' chief economist, Guo Lei, believes that aside from monetary policy, there are three opportunities in 2024 that could lead to a rise in the Producer Price Index (PPI): increased broad fiscal measures supporting construction investment, regulatory efforts to control steel production, and policies preventing overcapacity and redundant construction in key industries.
- (CICC) China International Capital Corporation Limited
中金公司 - Summary： The article does not provide specific information about China International Capital Corporation Limited (CICC). It focuses on China's economic performance in the first quarter of 2024, discussing GDP growth, industry contributions, and adjustments in economic forecasts by various institutions. CICC is not mentioned in the context provided.
- March, 2024：
- National Bureau of Statistics in March reported a significant leap in the Purchasing Managers' Index (PMI), leading market analysts to raise their forecasts for first-quarter economic growth
- April 16, 2024：
- National Bureau of Statistics released data showing that China's Gross Domestic Product (GDP) for the first quarter of 2024 amounted to 29.6299 trillion yuan, representing a year-over-year increase of 5.3%.
- April 16, 2024：
- Pierre Olivier, the Chief Economist of the International Monetary Fund (IMF), stated that based on China's first-quarter GDP growth rate exceeding the IMF's previous forecast of 4.6%, "the IMF may consider revising its economic growth forecast for China, potentially adjusting it upwards."
- First Quarter, 2024：
- China's exports, measured in U.S. dollars, grew by 1.5% year-over-year
- March, 2024：
- China's exports in March declined by 7.5% year-over-year
- First Quarter, 2024：
- The growth rate of fixed asset investment exceeded expectations, increasing by 0.3 percentage points to 4.5%
- First Quarter, 2024：
- Real estate investment experienced a significant drag, with the cumulative decline expanding to 9.5%
- First Quarter, 2024：
- The national per capita disposable income was 11,539 yuan. After adjusting for price factors, there was a real increase of 6.2%
- First Quarter, 2024：
- Private investment grew by 0.5% year-over-year
- First Quarter, 2024：
- The value added of large-scale high-tech manufacturing increased by 7.5% year-over-year
- First Quarter, 2024：
- Production of products related to the real estate sector has declined
- October 2022：
- The Producer Price Index (PPI) has continuously been negative
- First Quarter, 2024：
- The capacity utilization rate of industry was only 73.6%, a decrease of 2.3 percentage points from the previous quarter
- After 2024：
- GF Securities predicts three opportunities for a rebound in the Producer Price Index (PPI) core
- Second and third quarters of 2024：
- Changjiang Securities predicts actions such as equipment upgrades and the replacement of old consumer goods, combined with a temporary rebound in external demand, may help to marginally increase nominal GDP
- End of April, 2024：
- Guosheng Securities anticipates that the upcoming Central Politburo meeting is unlikely to see major shifts in its overall tone
- February, 2024：
- The 1 trillion yuan in additional government bonds issued in the fourth quarter of 2023 had completed the project list distribution
- End of June, 2024：
- The NDRC aims to initiate construction on all projects funded by these additional government bonds
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