China’s economy continued showing signs of expansion as industrial output recorded a 5.6 percent annual increase while retail sales rose by 3.7 percent, data from the National Bureau of Statistics (NBS) showed.
According to a report, the world’s second-largest economy sustained the recovery momentum from the first quarter and is on a firm trajectory to hit the goal of 5 percent gross domestic product (GDP) growth in 2024. Observers expressed their expectations of economic growth despite several challenges, including the decoupling attempt of the U.S. and the domestic real estate market’s downturn.
Industrial output rises despite U.S. pressures
China’s industrial output above the designated size rose by 6.2 percent year-on-year in the January-May period despite U.S. pressures on advantageous industries.
“For an economy as large as China’s, any industrial production growth rate above 5.5 percent is quite high and hard-won,” Tian Yun, an economist based in Beijing, stated on Monday.
Notably, industrial output of new-energy vehicles saw a 33.6 percent increase in May, while chip production grew by 17.3 percent, NBS data showed.
Retail sales rise
In addition to good growth in industrial output, China’s retail sales grew 3.7 percent in May, up from 2.3 percent in April. Observers attributed the rise to an increase in holiday consumption and the gradual recovery of the consumer market, supported by the government’s policy stimulus. In the first five months, retail sales rose 4.1 percent year-on-year.
In the January-May period, fixed-asset investment also rose 4 percent year-on-year, compared to 4.2 percent in the first four months, largely due to the continuous sluggishness in the property sector.
However, NBS spokesperson Liu Aihua stated that there were “some positive changes” in the real estate market after departments and localities further adjusted and optimized policies in mid-May. “If the economic rebound in June sustains the pace of May, then it is highly likely that GDP growth in the first half could exceed 5 percent,” Tian said.
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Economy expected to grow
China’s GDP grew 5.3 percent annually in Q1. With expectations of stress easing in global liquidity and the property sector’s adjustment stability, economic growth in the second half could rise further.
The third plenary session of the 20th CPC Central Committee will be held in Beijing in July, with more pro-growth stimulus measures expected to be announced. “It is important that Chinese policymakers maintain a strategic focus and adopt a more flexible approach in balancing the internal and external situations,” added Tian.
A number of international organizations have voiced confidence in China’s economic growth prospects. The IMF recently raised its forecast for China’s GDP growth to 5 percent in 2024 and 4.5 percent in 2025, citing strong first-quarter GDP data and policy measures. In addition, the World Bank in June raised its 2024 economic growth forecast from 4.5 percent to 4.8 percent.
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