The Chinese engine accelerates the pace. The economy of the Asian giant has grown by 5.3% in the first quarter, as announced this Tuesday by the National Statistics Office of the People’s Republic. The data is above numerous forecasts, shows signs of stabilization, and points towards the increase of “around 5%” in the gross domestic product (GDP) that Beijing has set for this year. It also follows in the wake of 2023, when activity increased by 5.2%, although without showing signs of a full post-pandemic recovery. The Asian locomotive continues in those. China fights in 2024 to avoid the various financial storms that are raging against it – collapse of the real estate market, debt of local governments, deflationary pressure – through the industrial transition towards new sectors such as the electric car, and the courtship of skeptical foreign investors. with the business environment. The growth has been 1.6% compared to the last quarter.
Shadows and uncertainty persist. Last week the Fitch agency lowered China’s credit rating to negative, a move linked to risks in public finances, while the transition to new growth models has not yet arrived. In December, the agency Moody’s already took a similar step. Fitch expects China’s central and local government explicit debt to rise to 61.3% of GDP in 2024 from 56.1% in 2023. In 2019, before Covid and the housing bubble peaking, was 38.5%.
Added to this is sluggish inflation – prices barely grew in March, three of the previous four months have been in negative territory, and industrial production prices have fallen 2.7% between January and March – and exports that are not taking off. : They have risen 4.9% in the first three months, but fell 7.5% in March, with the US and EU plummeting 16% and 15% respectively. Although part of the poor performance in March can be attributed to a statistical effect, due to the depreciation of the renminbi, it is not an isolated fact: exports were in negative territory between May and November 2023.
The growth figure has been described as “impressive” by the state press. “The national economy has had a good start in the first quarter, in which more positive factors have accumulated that lay a better foundation for achieving the annual objectives and tasks,” said Sheng Laiyun, deputy director of the ONE, in an appearance. when presenting the data collected by the Chinese press. “However, we must also note that the complexity, severity and uncertainty of the external environment have increased, and the foundations of a stable and improving economy are not yet solid,” he said.
Among the measures to recover the lost vigor, Sheng has highlighted the promotion of “the new productive forces”, the fashionable concept in Beijing. Under his name there are Marxist echoes, but he projects himself towards a high-tech future. And it is China’s great bet to tackle the economy’s addiction to brick. The shortlist made up of electric cars, lithium ion batteries and the photovoltaic sector increased their exports by 30% in 2023. But this has also set off alarms in the West, which fears being flooded with cheap Chinese technological products. In the last six months, the EU has launched investigations against alleged subsidies in the Chinese electric car sector, against steel producers and suppliers of wind turbines.
With the country focused on tourism during the Chinese New Year holidays, between the months of January and February, consumption has grown by 4.7% in this first quarter. The pull has been felt in the sectors linked to leisure and restaurants. The service industry has increased at a rate of 5%. But real estate continues to show signs of a slowdown that does not end: sales of new homes have fallen by 27.6%.
The investment, in a country where money goes where the State points, shows Beijing’s intentions. The private sector barely grew in the first three months of the year: a meager 0.5%, although if the weight of brick is eliminated, it increases to 7.7%. Meanwhile, the flow is directed towards high-tech industries, whose investment has increased by 11.4%, and up to 42.7% in the manufacturing of aerospace manufacturing.
