The National Bureau of Statistics of China announced that this year's first quarter GDP grew by 5.4% year-on-year, surpassing the market's original expectation of 5.2%. Among the economic indicators known as the "Three Horse Carriages," the March total retail sales of consumer goods increased by 5.9% and the industrial added value above designated size grew by 7.7%, both surpassing market expectations. It is noteworthy that the data does not reflect the impact of the US's reciprocal tariff hikes.
In March, total retail sales of consumer goods increased by 5.9%, the best level since December 2023, and significantly higher than the expected 4.3% growth. The industrial added value above designated size grew by 7.7%, marking the fastest pace since June 2021. For the first quarter of this year, total retail sales of consumer goods grew by 4.6% year-on-year; urban fixed asset investment grew by 4.2%; industrial added value above designated size grew by 6.5%.
●Retail Data Reflects Effectiveness of Consumption Subsidies
Michel Lin, an economist for Greater China at Société Générale, stated: The most surprising aspect is the retail sales, which indicate that consumption subsidies are having an effect. The industrial output data exceeded expectations, "but this is understandable after strong export data, yet all of this is in the past," as the data reflects the situation before the US significantly increased tariffs on Chinese goods in April, after which China launched countermeasures, and the external expectation is that it will affect China's economic growth prospects.
Several large banks predict that if China does not implement more stimulus measures, it may be difficult to achieve the economic growth target of around 5% this year. Recently, UBS, Goldman Sachs, Citibank, and others have lowered China's GDP growth forecast for 2025 to around 4% or lower. The market expects that Beijing, in response to the trade war, will introduce more stimulus measures, including the People's Bank possibly cutting interest rates or reserve requirements as early as this month. Simultaneously, efforts will be increased to boost domestic demand, stimulate consumption, and investment.
●March National Unemployment Rate Drops to 5.2%
The National Bureau of Statistics also announced that the average urban survey unemployment rate for the first quarter was 5.3%; the unemployment rate in March was 5.2%, down 0.2% from the previous month.
In addition, the decline in Chinese home prices further narrowed. According to calculations based on data published by the National Bureau of Statistics, the March price index for newly built commercial housing in 70 large and medium-sized cities fell by 4.5% year-on-year, marking a decline for 21 consecutive months, but a narrowing decline for five consecutive months; when compared on a monthly basis, it remained unchanged.