At a time when the world’s economies and global markets are grappling with the shocking consequences of the Iran conflict, China’s economy has grown faster than expected, defying any global shock.
According to Reuters report, China’s gross domestic product (GDP) grew 5 percent in the first quarter of this year compared to a year earlier.
Economists had estimated that China’s GDP would reach around 4.5-4.8 percent. However, official data highlights the world’s second economy’s resilience amid the high-risk conflict that has rocked other world economies, particularly Asian countries.
The latest official GDP figures are the first to be released after Beijing lowered its annual economic growth target from 4.5 to 5 percent, the lowest since 1991.
development imbalance
China achieved this unexpected boom on the basis of manufacturing. According to Kyle Chan, an analyst at the Brookings Institution, “cars and other exports were a major bright spot in the data.”
When it comes to property investment, the country is still struggling on this front.
Gross domestic product growth in the first quarter exceeded expectations, exceeding both the forecast 4.8 percent and the three-year low of 4.5 percent recorded in the previous quarter.
According to data released by the General Customs Administration, the country’s exports witnessed a slower growth of 2.5 percent compared to the previous figures.
Moreover, Beijing also experienced a rise in factory-gate prices due to deflation in March for the first time in more than three years.
On the other hand, China’s imports also increased by 28 percent in March, pushing the country’s monthly trade surplus to more than $50 billion, the lowest in more than a year.
Will China’s economic outlook remain bright?
An official at the Bureau of Statistics described the performance as a “rare and commendable” achievement, although he cautioned that the “complex and volatile” global scenario remains a significant risk.
According to Yixiao Zhou, an economics lecturer at the Australian National University, China’s imports are likely to increase in the wake of the Iran war. Moreover, analysts have also warned of input cost-induced worsening inflation in the coming months, which will hamper growth.
“The solid start to the year, driven by strong export performance, suggests that the direct impact of the Middle East conflict is limited for now,” said Junyu Tan, North Asia economist at Coface.
“But despite China’s relative resilience, the outlook is not rosy at all. The export engine could still be hampered by weak global demand if the conflict continues,” Tan said.
“China may face short-term disruptions, but the protracted war and high energy prices will begin to hamper growth by the second half of the year,” said Lin Song, chief economist for Greater China at Dutch bank ING.
