(Yicai Global) April 18 -- China’s gross domestic product expanded 4.5 percent in the first three months from the same period last year, beating an Yicai Global poll of chief economists which predicted 3.99 percent growth, as Covid-19 curbs end and the economy gets back on track.

“The economy got off to a good start in the first quarter,” Fu Linghui, spokesman of the National Bureau of Statistics, said at the press release today. Nonetheless, it should be noted that the global environment is still complex and in flux, domestic demand remains weak and the foundation for economic recovery is not yet solid, he added.

China’s GDP amounted to CNY28.5 trillion (USD4.1 trillion) in the three months ended March 31, according to the latest data from the NBS. This was a gain of 2.2 percent from the previous quarter.

GDP growth rebounded significantly from a year ago thanks to the economic restart, an uptick in demand and the low base last year, Ding Shuang, chief economist at UK lender Standard Chartered Bank’s China arm, told Yicai Global. 

The Chinese economy will benefit from the impetus to return to normal this year, Ding said. As last year’s relatively loose macro policies take effect and together with the low base in 2022, it would not be surprising if the economy achieved growth of 5.8 percent or higher this year.

In the first quarter, the industrial added value, or the contribution of industry to overall GDP, climbed 3 percent from a year earlier, a gain of 0.3 percentage point from the fourth quarter last year, the NBS said. There was a marked improvement in March when the indicator advanced 3.9 percent, 1.5 percentage point faster than January and February’s clip.

Consumption has become a major driving force in the economy. Total retail sales of consumer goods jumped 5.2 percent to CNY11.5 trillion (USD1.6 trillion). This is a huge turnaround from the fourth quarter last year, when it dipped 2.7 percent. Again, the indicator surged strongly in March, soaring 10.6 percent, some 7.1 percentage points higher than January and February’s growth rate.

As more consumption scenarios are rolled out during the holiday periods, services and bulk buying will recover even faster in the second quarter, said Lian Ping, chief economist at Zhixin Investment Research Institute.

In terms of investment, fixed asset investment, which excludes rural households, climbed 5.1 percent to CNY10.7 trillion, maintaining last year’s growth rate. Infrastructure investment jumped 8.8 percent and manufacturing investment leapt 7 percent, while real estate development investment fell 5.8 percent.

Infrastructure and manufacturing were the main sources of fixed asset investment growth in the first quarter, said Li Chao, chief economist of Zheshang Securities. Infrastructure investment should maintain high growth, and manufacturing investment will stay resilient supported by robust supply chain replenishment and industrial base reconstruction.

There is unlikely to be deflation in China's economy, Fu said. Consumer prices advanced 1.3 percent in the first quarter from a year earlier and broad money supply M2 surged 12.7 percent. From the perspective of economic operations, deflation is the sustained decline in prices accompanied by shrinking money supply, he said, adding there is unlikely to be deflation in the future either.

Editors: Shi Yi, Kim Taylor