China Confirms 'Economic Confidence'... Expected to Rise Further in Q2

Chinese Expert: "Over 6% Possible... IMF Will Also Raise Forecast"
JPMorgan, Citigroup, and Others Raise Outlook

Most of China's key economic indicators for the first quarter exceeded expectations, marking a successful rebound. Within China, optimistic forecasts suggest that the rebound will be even stronger in the second quarter, with growth rates potentially exceeding 6%.

According to the National Bureau of Statistics of China on the 18th, China's first-quarter gross domestic product (GDP) reached 28.4997 trillion yuan (approximately 5,460 trillion won), representing a 4.5% increase compared to the previous year. Although this falls short of the Chinese government's annual economic growth target of around 5.0%, it is the highest quarterly growth rate in a year since the first quarter of last year (4.8%).

Retail sales, which reflect changes in consumer spending across various distribution channels such as department stores and convenience stores, also surged significantly, signaling a recovery in the real economy. March retail sales increased by 10.6% year-on-year, greatly surpassing both the previous month's figure (3.5%) and the forecast (7.4%). This is the first time since June 2021, when retail sales grew by 12.1%, that China's monthly retail sales growth rate has reached double digits. For the first quarter, retail sales rose 5.76% year-on-year.

Optimistic outlooks are already emerging within China. Tian Yun, an economist and former vice chairman of the Beijing Economic Operation Association, told the state-run Global Times that "with stable export growth, additional policies to stimulate consumption and stabilize the real estate market, China's economy is expected to grow more than 6% in the second quarter," adding that "support for emerging industries and a moderate monetary policy will continue." He also predicted that "the International Monetary Fund (IMF) is likely to revise upward China's economic growth forecast in its next World Economic Outlook (WEO)."

External perspectives are not much different. The major U.S. bank JPMorgan has raised its growth forecast for China this year from 6% to 6.4%. Multinational financial firm Citigroup also increased its forecast from 5.7% to 6.1%. These banks attribute the positive outlook to China's shift from a zero-COVID policy to a with-COVID approach, which normalized economic activities. However, they expect the recovery to slow down in the second half of the year. Zhu Haibin, JPMorgan's chief China economist, said, "The recovery after reopening will continue in the short term," but added, "The early policies that supported the macroeconomy will become obstacles later this year, and growth will slow amid external uncertainties in the second half."

Not all indicators released on this day point to a "rapid recovery." The normalization of production in factories and public facilities, as well as investment, appears somewhat delayed. Reflecting this, industrial production in March increased by only 3.9% year-on-year and 3.0% for the first quarter. The market had expected industrial production to grow by 4.0% in March. Fixed asset investment recorded 5.1% growth in the first quarter, falling short of the previous month's 5.5% and the forecasted 5.7%. Regarding this, Li Anping, chief economist at Jishin Investment Research Institute, predicted, "With the launch of major projects, China's infrastructure investment will accelerate in the second quarter," adding, "Manufacturing and real estate investments will rebound steadily, further promoting the increase in fixed asset investment."

The unemployment rate, which affects disposable income, still has a long way to go. The urban unemployment rate at the end of March improved to 5.3%, better than the previous month's 5.6% and the forecasted 5.5%. However, the youth unemployment rate (ages 16?24) reached a record high of 19.6%, meaning one in five young people is unemployed. This year, 11.58 million university graduates will enter the job market. Citigroup emphasized that "Chinese authorities will not watch this passively," highlighting that "they will have to grapple with structural issues such as youth unemployment and local government debt."

This content was produced with the assistance of AI translation services.