China’s economy started off the year stronger than many experts predicted, despite facing some tough challenges in its property market. The country’s gross domestic product (GDP), which measures the value of all goods and services produced, grew by 5.3% in the first three months of 2024 compared to the same period last year. This growth exceeded expectations, as some thought the economy might slow down to 4.6% in the first quarter.
To keep its economy growing, China set an ambitious target of achieving around 5% growth for the whole year. But to meet this goal, experts say China needs its households to spend more money. Retail sales, which show how confident consumers are about spending, only grew by 3.1% in the first quarter, indicating that people might not be spending as much as hoped.
One big challenge for China’s economy is its property market. Investment in property fell by 9.5% in the first quarter, showing that real estate companies are struggling. This is a problem because the property market plays a significant role in China’s economy, accounting for about 20% of it.
The property market crisis has been going on for a while now, and it’s starting to have serious consequences. For example, in January, a major property company called Evergrande was ordered to shut down by a court in Hong Kong. Other big developers, like Country Garden and Shimao, are also facing financial troubles.
As a result of these challenges, credit ratings agency Fitch recently lowered its outlook for China’s finances, warning that the country’s economy could face even more difficulties ahead.
Despite these challenges, China’s economy grew by 5.2% in 2023, according to officials. For many years, China’s economy grew rapidly, with GDP increasing by almost 10% each year on average. However, now the country is facing some tough times, and it will need to find ways to overcome these challenges to keep its economy strong.
