CNBC TV Interview with MD & CIO Helen Zhu

April 17, 2023

China’s economy grew 4.5% in the first quarter, the fastest pace in a year

Jihye Lee

China’s first-quarter gross domestic product rose sharply while global peers face slowing growth as central banks hike rates to tame inflation.

GDP grew by 4.5% in the first quarter, China’s National Bureau of Statistics said Tuesday. That marks the highest growth since the first quarter of last year — when China’s economy grew by 4.8% — and better than the 4% forecast in a Reuters poll. Quarter-on-quarter, the economy grew 2.2%.

China’s growth has been under the spotlight as it reopens after ending most of its strict Covid restrictions that were in place for nearly three years. The economy expanded 2.9% in the fourth quarter of 2022.

Retail sales jumped 10.6% in March as online sales of physical goods picked up. Industrial output rose 3.9%, slightly lower than Reuters’ forecasts of 4%.

Year-to-date fixed asset investment was weaker than expected and rose 5.1% compared with a year ago, as growth slowed in infrastructure and manufacturing investment.

Real estate investment meanwhile continued to decline.

The economy grew 3% in 2022, less than Beijing’s official target of around 5.5% set in March last year. For 2023, the government last month set a modest growth target of “around 5%.”


Goldman Sachs said China’s first-quarter growth of 4.5% supports the firm’s full-year outlook for the economy to grow 6%.

“Today’s data are in line with our full-year bullish view for China growth,” Goldman Sachs’ chief China economist Hui Shan told CNBC.

“That is the kind of the rebound after the reopening [and] is at the core of why we have our above consensus forecast of 6% growth for the full year,” she said.

While most analysts polled by Reuters don’t expect to see a change in the central bank’s benchmark lending rate, some believe the People’s Bank of China could marginally cut its one-year loan prime rate if China’s inflation slows further.

China’s consumer inflation hit an 18-month low earlier this month.

“Uneven is the right word to describe the current state of the economy and also confidence level is not as strong as the macro data are suggesting,” the Goldman economist said, adding that policymakers are likely to maintain a “pro-growth” stance in order for demand to pick up.

“So now the policymakers are trying to maintain a pro-growth stance so that demand can gradually tick up on the back of lower interest rates,” she said.


China’s economy is likely to see another boost from government stimulus later in the year, NF Trinity’s managing director Helen Zhu told CNBC’s “Street Signs Asia” shortly after the data release.

“I think we’re going to be tracking higher than the 5% target for the second quarter, and hopefully by the third quarter, a lot of the policy stimulus would have come through,” she said.

She added that the latest reading pushes back against skeptics of China’s ability to reach its 2023 full-year growth target and will likely lead to upward revisions in GDP forecasts accordingly.

“The numbers are undoubtedly much stronger than anyone anticipated, and I think it’s a really good start of to the year,” she said.

ING’s Chief China economist Iris Pang said she also expects the Chinese government to release extra stimulus to boost its infrastructure investments and consumption.

“To keep the 5% growth target for 2023, the government needs to push forward infrastructure investments, most of which should be building metro lines and increasing the number of 5G towers as these are already in the plan for this year,” she wrote in a note ahead of the GDP report.

“We, therefore, expect GDP to grow faster at 6.0%YoY in the second quarter. We keep the full-year GDP forecast at 5% as external demand should be a concern for the year,” Pang wrote.


The value of China’s services sector also rose by 5.4% in the first quarter compared with a year ago as the economy ended its zero-Covid policy.

The index of services production rose 9.2%, government data showed, led by accommodation, catering, and information technology services in March.

But economists have warned China’s economic recovery could take longer than expected — with the likes of Citi pushing back its target for the Hang Seng index by three months.

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