Q1 Economic Growth Rate Exceeds Expectations, Records 5.3%
"Will Accelerate Investment Plan Announcements and Government Bond Issuance"
China, which recorded an economic growth rate exceeding expectations in the first quarter of this year, announced that it will revitalize the economy through a budget of 700 billion yuan (approximately 133 trillion won). This is a policy to continue the growth trend, refuting external 'Peak China' forecasts that suggest the Chinese economy may have peaked and is declining.
On the 17th, Liu Suseo, Deputy Director of the National Development and Reform Commission (NDRC) of China, stated at a press conference held at the State Council Information Office that "the announcement of investment plans within the central budget will be accelerated," revealing that a total investment budget of 700 billion yuan has been allocated at the central government level this year, and more than 200 billion yuan, which is 30% of this, has already been executed.
Deputy Director Liu also explained, "We will complete the preliminary review of the local government special bond projects, which are planned to be issued at a scale of 3.9 trillion yuan," adding, "The NDRC has inspected the investment fields and preliminary work of projects submitted by local governments and has completed the preliminary review of this year's special bond projects." He further elaborated, "We will cooperate with relevant parties to promptly prepare the final list of projects, urge local governments to speed up bond issuance and utilization, and promote projects to increase the physical workload."
In addition, the NDRC plans to promote 15,000 projects through additional issuance of 1 trillion yuan worth of national bonds in three rounds, aiming to start them by the end of June. According to the NDRC, China's nationwide fixed asset investment in the first quarter increased by 4.5% year-on-year, with manufacturing investment and infrastructure investment rising by 9.9% and 6.5%, respectively. However, private investment, which accounted for 51.6% of total investment, increased by only 0.5%.
Earlier, the National Bureau of Statistics announced that China's Gross Domestic Product (GDP) in the first quarter reached 29.6299 trillion yuan, an increase of 5.3% compared to the previous year. This figure not only exceeds experts' forecasts (4.8%) and the previous month's figure (5.2%) but is also higher than last year's annual growth rate (5.2%) and the fourth quarter growth rate (5.2%).
However, some in the market are diagnosing that the 'Peak China' phenomenon may be becoming visible as economic indicators such as industrial production and retail sales, which showed strong performance in the first and second quarters, somewhat declined in March. In particular, major foreign media have speculated that the Chinese government, confident in these indicators, may be reluctant to implement direct economic stimulus measures or high-intensity support.
Li Chang'an, Professor of China’s Open Economy at the University of International Business and Economics, told the state-run media Global Times (GT), "To sustain solid economic growth, the government needs to implement more macroeconomic support measures," mentioning monetary policies such as adjustments to the central bank's reserve requirement ratio and interest rates. Song Guoyu, Deputy Director of the American Studies Center at Fudan University, argued against the 'Peak China' sentiment, saying, "Such related investigations show rigid thinking," and "Growth data is not a coincidence but a continuation of a trend."
However, internally, there is an assessment that the growth exceeding expectations in the first quarter was led by consumption, while the growth momentum of investment and trade was somewhat weak. According to the National Bureau of Statistics, consumption contributed 73.7% to China's economic growth in the first quarter. Professor Li stated, "Growth is mainly driven by consumption, but in terms of investment and foreign trade, the situation has not changed beyond expectations and has not rebounded as much as anticipated," adding, "One of the reasons is the weak demand from major trade partners such as the United States and Europe, and China needs to diversify its export markets and develop new markets."
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