Dongsanhuan Ring Road, CBD, Beijing, China.
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China’s economy expanded by 5.4% better than expected in the first quarter, maintaining a strong impulse, even when the EE threats. UU. They drive important investment banks to reduce the country’s annual growth perspective.
The GDP of the first quarter exceeded the expectations of the Reuters survey for a growth of 5.1% year after year, based on a recovery that was at the end of 2024, thanks to a broad impulse of policy stimulus.
Retail sales in March increased 5.9% year after year, according to the data of the National Statistics Office on Wednesday, abruptly exceeding analysts’ estimates for a 4.2% growth. Industrial production expanded 7.7% compared to the previous year, versus average estimates or 5.8%.
The investment of fixed assets grew 4.2% in the first quarter against estimates of a 4.1% increase in a reuters survey. However, the drag of real estate within the investment of fixed assets, at 9.9% for the year until March, while the infrastructure and manufacturing investment accelerated the rhythm.
The inefficient urban rate fell to 5.2% in March, after a maximum of two years or 5.4% in February.
The Statistics Office described the Chinese economy as “to a good and stable beginning” and emphasized how “innovation [was] Playing an increasingly important role. “The Chinese Startup Depseek in January revealed its AI advance that rivals OpenNai technology based in the United States.
But officials warned that “the external environment is becoming more complex and severe” and that domestic demand remained insufficient.
“We must implement more proactive and effective macro policies, expand and strengthen the national economy … and actively respond to the uncertainties of the external environment,” the office said in an English statement.
Chinese leadership has established an annual annual growth objective of “about 5%” this year, a more difficult objective to achieve the perspectives of an intensive commercial war and a persistently dazzled internal consumption.
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The strong GDP growth shows that “the stimulus was very effective to boost consumption and support investment,” said Tiannchen Xu, a senior economist of the Economic Intelligence Unit, while warning that China has typically published strong economic data at the beginning of the year.
“The commercial war 2.0, where China and the United States are effectively imposing commercial embargoes with each other, will have an impact of size on China’s export sector and CAPEX (capital expenses) will decrease as a result,” said Xu.
The statistics agency said that the proportion of China’s exports to the US.
Commercial War concerns
Despite the optimistic monthly data in March, “the commercial war damage will appear in the macro data next month,” said Zhiwei Zhang, president and chief economist of Pinpoint assets management, noting that “high frequency indicators suggest exports [have] Slowly decelerated in the region. “
The Tit-For-Tat tariff war with the United States has brought the total levies imposed by the president of the United States, Donald Trump, in Chinese products to 145%, which leads to Beijing reprisals to raise taxes on US goods to 125%. These levels of import tariffs are expected to reduce China’s exports and eliminate several percentage points of the expansion of the economy this year.
“It is likely that growth deteriorates rapidly from the second quarter given the low possibility of short -term bilateral negotiations to establish radiation out of 125% of the rate,” said a team of economists from Morgan Stanley Week.
Several investment banks have reduced China’s growth forecasts this year, with most economists who doubt Beijing Beijing reach their official objective, citing the grades of the substantial increase in US tariffs on Chinese products.
On Tuesday, UBS Group added to a series of growth sales with the most pessimistic prognosis among the main banks, projecting that China’s economy will expand only 3.4% this year as US tariffs of strangulation of exports. The Investment Bank projects that China’s exports to the United States fell into two thirds in the next quarter, and general exports decrease 10% in terms of dollars this year.
There is a growing anticipation that Chinese officials will release more forceful stimulus measures to reinforce national consumption and real estate market to counteract the possible commercial interruption.
“The urgency for greater policy flexibility is increasing and fiscal expansion will probably do most of the heavy work to stabilize growth, although this should be insufficient to completely compensate severe external blows, said” “, Wednesday.
The main economist of Morgan Stanley’s China, Robin Xing, hopes that the Chinese authorities will reduce the monetary steps in the second quarter, with a cut of 50 cut points in the reserve requirement ratio and a 15 -point cut in the interest rates.
Beijing is likely to accelerate the issuance and deployment of local construction bonds and increase the consumer goods exchange program with broader coverage or more general subsidies, as well as an impulse for local governments to the Inventory of Housing of the Recock.
Hey, also expects China to present an additional fiscal stimulus or 1 billion yuan to 1.5 billion yuan ($ 136.5 billion at $ 204.7 billion) in the second half of the year to provide a partial displacement to the tariff shock.
Speaking in an informative session of the media after the data launch, the attached commissioner of NBS, Sheng Laiyun, warned that global protectionism was increasing and China should “work more” for its economic recovery.
China has decades of experience in responding to several crises from the Covid-19 pandemic to Us-China tensions, SHENG said.
American tariffs can have some pressure on trades, but China’s economy will remain resistant, he added.
