China's Q1 2024 GDP Surpasses Forecasts: AUD Reacts

AUD: Breaking: China’s Q1 2024 GDP Growth Surpasses Expectations

China Q1 GDP Increased at 5.3%YoY versus 5.2%YoY printed in the last quarter. Quarterly basis increased at 1.6% versus 1.0% printed in the previous quarter. Retail sales at March month increased at 3.1% versus 4.5% expected and 5.5% printed last month. Industrial production came at 4.5% YoY versus 5.4% estimate and Previous month at 7.0%. Fixed asset investment came at 4.5% in March month versus 4.3% expected and 4.2% previous month. Overall all sides of China Data shows well strength versus previous quarters, So Australian Dollar moved mild higher against counter pairs.

AUDUSD is moving in Descending Triangle and market has fallen from the lower high area of the pattern

In the first quarter of 2024, China’s economy expanded by 5.3% year-over-year, compared to the 5.2% growth recorded in the final quarter of 2023, according to official data released by the National Bureau of Statistics (NBS) on Tuesday. Market expectations for this period were pegged at 5.0%.

On a quarterly basis, China’s Gross Domestic Product (GDP) saw a 1.6% increase in Q1 2024, up from the 1.0% growth registered in the previous quarter.

For March, China’s year-on-year Retail Sales climbed by 3.1%, falling short of the anticipated 4.5% and trailing behind the 5.5% recorded previously. Industrial Production in the country reached 4.5% year-on-year, below estimates of 5.4% and lower than February’s 7.0%.

Additionally, Fixed Asset Investment saw a year-to-date increase of 4.5% in March compared to the same period last year, surpassing expectations of 4.3% and exceeding the previous figure of 4.2%.

AUD: China Surpasses Expectations: Economy Grows 5.3% in Q1

GBPAUD is moving in Descending channel and market has reached lower high area of the channel

China’s Economy Outpaces Expectations in First Quarter

Official data released by China’s National Bureau of Statistics on Tuesday revealed that China’s economy surged ahead faster than anticipated in the first quarter of the year.

During the January to March period, gross domestic product (GDP) expanded by 5.3% compared to the previous year. This growth surpassed the 5.2% expansion recorded in the fourth quarter of 2023 and exceeded the 4.6% growth forecasted by economists polled by Reuters.

On a quarter-on-quarter basis, China’s GDP grew by 1.6% in the first quarter, surpassing Reuters’ poll expectations of 1.4% and outpacing the revised fourth-quarter expansion of 1.2%. Notably, Beijing has set a growth target of around 5% for the year 2024.

External demand played a significant role in driving this growth, with export volume increasing by 14% year-on-year, according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

Zhang noted that the robust growth in the first quarter aligns with the government’s current policy stance, suggesting that authorities may be less inclined to pursue further rate cuts, especially considering the declining probability of a Federal Reserve rate cut.

However, despite the strong GDP growth, other economic indicators for March fell below expectations. Industrial output grew by 4.5% year-on-year, missing expectations of 6%, while retail sales increased by 3.1% year-on-year, lower than the anticipated 4.6%.

Bruce Pang, chief economist and head of research for Greater China at JLL, attributed the weaker-than-expected industrial output growth to sluggish utilization rates of industrial capacity. He also highlighted that the slowdown in retail sales was not unexpected.

Pang suggested that continued policy support for equipment investment and product renewal could bolster domestic demand and help maintain the targeted GDP growth rate of around 5%.

In terms of employment, major cities saw a slight decrease in unemployment rates to 5.2%, ending a three-month streak of increases.

Despite the stronger-than-expected GDP growth, China’s real estate sector continued to face challenges. Property investments fell by 9.5% year-on-year in the first quarter, with sales of new commercial buildings plummeting by 19.4% year-on-year.

The data indicated that while China’s economy expanded at a faster pace than forecasted, there are concerns about the uneven nature of this growth. Pang emphasized that optimism may be tempered by subdued domestic demand, which remains a significant weak point.

AUD: China’s Q1 GDP Strong, March Data Indicates Weak Demand

AUDCAD is moving in Ascending channel and market has fallen from the higher high area of the channel

China’s First Quarter GDP Exceeds Expectations Amid Weak Domestic Demand

Data released on Tuesday revealed that China’s economy experienced faster-than-expected growth in the first quarter, offering some relief to officials amidst ongoing challenges such as the prolonged weakness in the property sector and mounting local government debt. However, alongside the GDP figures, a series of March indicators, including property investment, retail sales, and industrial output, indicated that domestic demand remains subdued, hindering overall economic momentum.

The Chinese government has implemented fiscal and monetary policy measures in an effort to achieve its ambitious 2024 GDP growth target of around 5%. Analysts noted that last year’s growth rate of 5.2% may have been inflated by a rebound from the COVID-affected 2022.

Gross domestic product (GDP) expanded by 5.3% year-on-year in January-March, surpassing analysts’ expectations of a 4.6% increase and slightly outpacing the 5.2% expansion recorded in the previous quarter. On a quarter-on-quarter basis, GDP grew by 1.6% in the first quarter, exceeding the forecasted growth of 1.4%.

Jeff Ng, head of Asia macro strategy at SMBC in Singapore, commented that the positive GDP result is conducive to achieving the government’s growth target, with momentum appearing stable for now. However, he cautioned that sentiment remains bearish and anticipates possible reversals in the last quarter of 2024.

Despite the solid GDP growth, March data on exports, consumer inflation, producer prices, and bank lending raised concerns about the sustainability of momentum, prompting calls for additional stimulus measures. Industrial output in March grew by 4.5% year-on-year, falling short of the forecasted increase of 6%, while retail sales rose by 3.1% year-on-year, below the anticipated 4.6% increase.

Fixed asset investment expanded by an annual 4.5% over the first three months of 2024, surpassing expectations for a 4.1% rise but lower than the 4.2% growth recorded in the January-February period. Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore, noted that despite the seemingly positive headline GDP number, momentum appears weak towards the end of the quarter, as reflected in the March data.

The challenges facing China’s economy, including the ongoing crisis in the property sector, geopolitical tensions with the United States, and structural flaws in the economy, pose significant hurdles to achieving sustainable growth. Analysts anticipate further policy support from the People’s Bank of China (PBOC), including potential cuts in banks’ reserve requirement ratio and interest rates, to bolster economic recovery efforts. However, uncertainties persist, particularly regarding the deep adjustment of the real estate market and geopolitical risks stemming from China-U.S. confrontations.

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