Economy sees steady start in first quarter

China's GDP sees faster-than-expected growth of 4.8 percent year-on-year

China's economy registered a steady start in the first quarter of the year, demonstrating its resilience and potential in the face of a complicated external environment and resurgent domestic COVID-19 cases, officials and experts said on Monday.

Experts said the faster-than-expected first-quarter growth was mainly aided by robust growth in the first two months before the weakening in economic activities in March, and warned of challenges and uncertainties at both home and abroad that may cloud the overall outlook.

They expected a stronger macro policy in the second quarter to shore up the growth, saying that China has the potential to meet its economic growth target of around 5.5 percent for this year.

China's gross domestic product expanded 4.8 percent year-on-year to 27 trillion yuan ($4.24 trillion) in the first three months, picking up from 4 percent in the fourth quarter last year, according to the National Bureau of Statistics on Monday.

Despite facing a complicated international situation and domestic COVID-19 cases, the fundamentals of China's long-term sound economic growth remain unchanged, Fu Linghui, the bureau's spokesman, said at a news conference in Beijing.

The government will step up macroeconomic policy support to stabilize the economy and strive to meet the annual growth target, he said.

The bureau's data showed that China's value-added industrial output grew 5 percent year-on-year in March.

Fixed-asset investment rose 9.3 percent year-on-year in the January-March period, but retail sales declined 3.5 percent year-on-year in March, marking the first decline since July 2020.

Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges, said China has the potential to record a growth rate between 5.5 and 6 percent this year despite headwinds, and said that a recovery in exports in the second and third quarters may help relieve downward pressures.

Luo Zhiheng, chief economist at Yuekai Securities, said China's economy faces risks from supply shocks amid the resurgence of domestic virus cases, and a weak real estate sector and international geopolitical tensions have also clouded the outlook.

Luo called for more steps to shore up growth, including stepping up fiscal and monetary easing and ramping up support for low-income individuals and hard-hit businesses.

In its latest efforts to beef up structural monetary support to the real economy, China decided at a key meeting on Monday, attended by Vice-Premier Liu He, to launch a relending facility of 100 billion yuan to support the transportation and logistics sector.

The newly announced relending facility, in tandem with the relending facility worth 200 billion yuan that is being established to support technological innovation enterprises, is expected to release funds of 1 trillion yuan to help stabilize the supply chain, according to the meeting.

The People's Bank of China also released a notice on Monday that proposed 23 measures to ramp up support for the real economy, including strengthening financial aid to industries, enterprises and individuals affected by the COVID-19 and supporting the reasonable financing demand of real estate developers.

Finance Minister Liu Kun said in an article published on Saturday that the proactive fiscal policy will be frontloaded and fully implemented.

Policies need to be issued at the earliest possible time with funds allocated in a timely way to generate economic activities and stabilize the economy, Liu said in the article in the Qiushi Journal, a flagship magazine of the Communist Party of China Central Committee.

The government can increase infrastructure investment with faster approvals and disbursement funding, helping the annual growth in infrastructure investment to reach about 7 to 8 percent, said Wang Tao, head of Asia economics and chief China economist at UBS Investment Bank.