China's improving economic trajectory is not merely a cyclical rebound but stems from the accelerated formation of new quality productive forces, the faster transformation between old and new growth drivers, and the systemic unleashing of domestic demand potential. From the "new three" sectors to the "AI+" initiative, and from the layout of future industries to the upgrading of service consumption, the trend of China's economic structure becoming increasingly optimized amidst change is becoming more evident.
Despite facing multiple challenges, including a more complex and severe external environment, rising global trade frictions, and recurring geopolitical conflicts, China's economy delivered a high-quality and substantial report card in the first quarter. The gross domestic product (GDP) reached 33.4193 trillion yuan, representing a year-on-year increase of 5.0% calculated at constant prices, which was 0.5 percentage points faster than the growth rate in the fourth quarter of the previous year. The national economy achieved a strong start, with new quality productive forces growing rapidly and the domestic demand engine playing a prominent role, demonstrating strong resilience and risk resistance. This has laid a solid foundation for achieving the annual economic goals and continues to make China a significant "engine" for global economic growth.
A Strong Start with Enhanced Momentum for "Progress" Against a backdrop of significantly rising external uncertainties, China's first-quarter economic growth rate not only exceeded the full-year level of the previous year but also continued to rank among the top performers globally. In terms of overall growth, the pace has picked up, and expectations are improving. Quarter-on-quarter GDP growth was 1.3% in the first quarter, showing a steady acceleration. In March, the Producer Price Index (PPI) turned positive from negative, and the Manufacturing Purchasing Managers' Index (PMI) stood at 50.4%, up 1.4 percentage points from the previous month, returning to expansion territory. The production and business activity expectation index for enterprises was 53.4%, reflecting ongoing recovery in market expectations and development confidence. International institutions such as Goldman Sachs and Citigroup have recently raised their economic growth forecasts for China for 2026, noting that China's complete industrial chain and ample policy space make it the most certain major force for global growth.
From the demand perspective, domestic demand's contribution was outstanding, with noticeable structural optimization. In the first quarter, domestic demand contributed 84.7% to economic growth, an increase of nearly 30 percentage points year-on-year, signifying that domestic demand is the primary engine of China's growth. Total retail sales of consumer goods increased by 2.4% year-on-year, 0.7 percentage points faster than the fourth quarter of the previous year. Within this, service retail sales grew by 5.5%, with modern service consumption such as communications and information services, tourism consulting and leasing, and cultural, sports, and leisure services growing even faster. Online retail sales of goods and services rose by 8.0% year-on-year, indicating that both online and offline consumption are jointly driving the release of domestic demand potential. The investment structure continued to optimize, with fixed-asset investment growing by 1.7% year-on-year, turning from negative to positive. Investment in equipment manufacturing and emerging industries continued to grow at a high rate, becoming important supports for stabilizing investment.
On the supply side, industrial growth accelerated, and new growth drivers were cultivated rapidly. In the first quarter, the value-added of industrial enterprises above the designated size increased by 6.1% year-on-year, significantly faster than the growth in the fourth quarter of the previous year. The growth momentum primarily came from structural upgrades, with equipment manufacturing and high-tech manufacturing growing by 8.9% and 12.5% respectively, significantly higher than the average for industries above the designated size. The output of intelligent products such as 3D printing equipment and industrial robots saw substantial increases, indicating an accelerating pace in the digital and intelligent transformation of manufacturing. As production picked up, corporate profits also improved simultaneously, and the enhanced profitability provided strong support for expanded reproduction. The vibrancy on the production side also effectively stabilized the job market. The surveyed urban unemployment rate in the first quarter was on par with the same period last year, indicating an overall stable employment situation and creating a virtuous cycle where production and employment mutually reinforce each other.
Externally, foreign trade resilience exceeded expectations, and the structure of foreign investment optimized. In the first quarter, the total value of goods imports and exports reached 11.838 trillion yuan, a year-on-year increase of 15.0%, marking the highest quarterly growth rate in nearly five years. Exports grew by 11.9%, while imports grew by 19.6%. Imports and exports with countries participating in the Belt and Road Initiative increased by 14.2%, and imports and exports by private enterprises grew by 16.2%, accounting for 57.3% of the total. Despite a complex external environment, China's complete industrial system and strong supporting capacity underpinned the robust export performance. Meanwhile, actual utilization of foreign capital in high-tech services maintained growth, showing that China remains one of the preferred destinations for global capital seeking safety and value appreciation.
Accelerated Transformation with Emerging "New" Vitality The better-than-expected first-quarter economic data reflects the positive results of the sustained and profound transformation of China's growth drivers. Therefore, the improving economic trend is not a simple cyclical rebound but originates from the accelerated formation of new quality productive forces, the faster shift between old and new growth drivers, and the systemic release of domestic demand potential. From the "new three" sectors to "AI+," and from future industry layouts to service consumption upgrades, the trend of China's economic structure optimizing through change is becoming increasingly apparent.
New quality productive forces are gradually becoming new growth drivers. In the first quarter, the value-added of high-tech manufacturing increased by 12.5% year-on-year, 3.1 percentage points faster than the previous year. Investment in high-tech industries grew by 7.4% year-on-year. Future industries, represented by embodied intelligence, 6G, and the low-altitude economy, are being laid out at a faster pace and are gradually becoming new engines for investment growth. The deep penetration of new technologies in the manufacturing sector is driving the intelligent transformation and green transition of traditional industries, while also spawning new industries and business models. Regions are developing characteristic and advantageous industries based on local conditions, the integration of the digital economy and the real economy is accelerating, and the construction of a modern industrial system is progressing steadily and swiftly.
New types of consumption have become an important driver of domestic demand. As household incomes grow steadily, the consumption structure continues to upgrade. Sales of basic living goods and upgraded goods achieved relatively fast growth, with retail sales of communication equipment and gold, silver, and jewelry by units above the designated size increasing by 20.8% and 12.6% respectively. Service consumption surged, with service retail sales growing by 5.5% year-on-year in the first quarter, significantly boosted by holiday economy effects. New scenarios such as digital consumption, green consumption, and health consumption are continuously expanding. The policy of replacing old consumer goods has shown significant effects, effectively promoting the quality upgrade of urban and rural consumption. New types of consumption are transitioning from "trendy items" to "everyday items," becoming a fundamental force driving economic growth.
The vitality of the private economy has been effectively stimulated. In the first quarter, among industrial enterprises above the designated size, the value-added of private enterprises increased by 6.1% year-on-year. Imports and exports by private enterprises grew by 16.2%. The decline in private investment narrowed by 4.2 percentage points compared to the full previous year, and actually increased by 1.3% after excluding real estate development investment. The confidence index for small and medium-sized enterprises rose to its highest level since May 2023. With the implementation of the private economy promotion law and the effects of various relief policies, the role of the private economy as a vital new force in advancing Chinese modernization is becoming more pronounced. Market expectations and investment willingness are gradually improving, injecting continuous vitality and creativity into economic development.
Solid Foundation with Unchanged Long-Term Positive Trend The fundamentals of China's long-term economic growth remain positive. Strong developmental resilience and vast maneuvering space provide the confidence to weather any storm. This confidence comes not only from short-term, precise, and forceful macro-policy combinations but also from long-accumulated comprehensive advantages in "human resources, capital, and materials."
In the short term, policies are working in synergy, and the policy toolkit is well-stocked. In response to external shocks and internal pressures, macro policies have been deployed proactively and cohesively. A more proactive fiscal policy, through measures such as ultra-long-term special government bonds and accelerated issuance and use of special bonds, has strongly supported the turnaround of investment from negative to positive. An appropriately accommodative monetary policy has maintained reasonably ample liquidity, providing a suitable monetary and financial environment for the real economy. Policies like large-scale equipment renewals and consumer goods replacements, along with the convening of high-quality development conferences for the service sector, have precisely leveraged investment and consumption demand. These policies accurately target bottlenecks and apply tailored remedies, effectively consolidating the economic recovery and upward trend.
In the long term, factor advantages are significant, and market space is vast. China possesses a super-sized market of over 1.4 billion people, including more than 400 million middle-income individuals. This is the advantage of "human resources" and also fertile ground for maximizing the use of "materials." A complete industrial system, strong supporting capacity, and a continuously improving business environment provide stable and predictable returns for capital. The good growth momentum in high-tech service investment in the first quarter indicates that capital is accelerating its convergence towards the high end of the value chain. The deepening advancement of new industrialization, the digital economy, and green transformation are continuously releasing new growth potential. In particular, the ongoing optimization of China's energy structure has effectively reduced the comprehensive costs for the manufacturing sector against the backdrop of fluctuating overseas energy prices, enhancing international competitiveness.
As long as China adheres to the principle of seeking progress while maintaining stability, using progress to promote stability, and establishing the new before abolishing the old, fully utilizes the available policy space, deepens reform and opening up, leads industrial innovation with technological innovation, and builds long-term competitive advantages by developing new quality productive forces, the Chinese economy is fully capable of navigating through rough waters and embracing broader prospects. It will continue to sail steadily on the course of high-quality development, providing sustained sources of power, efficiency, quality, and institutional strength for achieving the expected goals of the 15th Five-Year Plan and basically realizing modernization by 2035.
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