By Jack Denton
Chinese growth blew past expectations in the first quarter, but official figures of gross domestic product $(GDP.UK)$ released Tuesday belie wider weakness in the world's second-largest economy, including persistent pressures from the property sector.
Analysts see China's economic recovery -- on which the fortunes of some widely-held stocks rest -- as fragile.
China's GDP rose 5.3% year over year in the first quarter, far outpacing growth forecasts of 4.5%, based on the estimates among economists surveyed by FactSet. A slowdown in China's economy has rattled global markets over the past year, so an uptick in growth is a welcome sign.
But the wider picture continued to be one of weakness. Industrial output rose 4.5% in March, lagging estimates of 5.5% growth, while retail sales advanced just 3.1% last month, behind forecasts of 4.5%. The contraction in real estate also deepened and a source of strength -- manufacturing investment -- slowed.
Markets reacted poorly to Tuesday's data, albeit investors in Asia were also on the back foot after the selloff on Wall Street on Monday. Hong Kong's Hang Seng Index fell 2.1% and shares in Chinese tech giant Alibaba retreated near 1% in the U.S. premarket. Futures tracking the S&P 500 were mildly lower.
Analysts at research firm Capital Economics continued to highlight weakness in China's economy and a fragile road to recovery after Tuesday's data, even as short-term fiscal stimulus provides some support. Structural headwinds in the property sector also remain a key risk to avoiding further slowdowns.
Write to Jack Denton at jack.denton@barrons.com
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(END) Dow Jones Newswires
April 16, 2024 06:39 ET (10:39 GMT)
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