China’s GDP growth beat expectations – so why are analysts and business groups still downbeat?

Weak consumer confidence, red flags in the property sector and trade uncertainties demand attention, according to economists

And while first-quarter GDP data shows China is on course to meet its full-year target, policymakers are being called on to bolster demand and introduce policy support

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Some analysts have raised concerns that China’s economic recovery is being impeded by a lack of domestic consumption. Photo: AFP

Mia Nurmamatin Hong KongandKinling Loin Beijing

Published: 11:00pm, 16 Apr 2024Updated: 9:48am, 17 Apr 2024

China’s quarterly macroeconomic data has sent mixed signals concerning the country’s outlook while triggering fresh calls for greater stimulus measures, as new growth drivers such as electric vehicles receive growing scrutiny overseas and the property market remains in the doldrums.

Despite an apparent acceleration and positive momentum in economic activities – with China’s first-quarter gross domestic product rising 5.3 per cent from a year earlier and growing by 1.6 per cent from the previous quarter – analysts have flagged concerns over an unbalanced recovery that looks to rely heavily on manufacturing and exports, both of which could be targeted amid external tensions.

Meanwhile, foreign investors are pondering how Beijing might be able to persuade Chinese households to loosen the purse strings as their job and income uncertainties remain high.

“It is too early to cheer for a full rebound in sentiment, as growth will likely see a gradual deceleration in the coming quarters,” said Gary Ng, a senior economist at Natixis Hong Kong.

“The downside risk [in China’s economy] is how quickly the drag from property investment will diminish, and whether households are willing to spend more and save less.”

Beijing said the nation’s property sector continues to face downward pressure, with investments falling by 9.5 per cent in the first quarter, year on year, further suppressed from 9 per cent in the first two months.

ANZ Bank, which revised up its China growth forecast on the better-than-expected quarterly data, estimated that the property crisis will drag GDP growth by 0.3 percentage points for the full year, while property investment is expected to drop by 12 per cent.