China's economy expanded by 5% year-on-year in the first quarter of 2024, official data showed on Thursday, beating market expectations and marking an improvement from the three-year low growth rate of 4.5% in the fourth quarter.
Key Takeaways
China's economy grew by 5% in Q1 2024, beating market forecasts but facing challenges from the Iran war. Industrial output rose 5.7%, while retail sales slowed to 1.7%. Plastic shortages due to the conflict are driving a shift to paper packaging in Asia.
- China's GDP expanded 5% year-on-year in Q1
- Industrial production increased by 5.7% in March
- Retail sales grew only 1.7%, missing forecasts of 2.3%
- Iran war disrupts plastic supplies, boosting demand for eco-friendly packaging
The National Bureau of Statistics (NBS) reported that industrial output rose 5.7% in March from a year earlier, surpassing expectations for a 5.5% rise according to Reuters' poll of analysts. However, retail sales grew only 1.7% in March, down from the 2.8% growth in January-February and below economists' forecast of a 2.3% increase.
The U.S.-Israeli war against Iran has sent oil prices to nearly $100 per barrel, leading to a surge in plastic prices and disrupting supplies. This conflict is driving Asian companies like Yonwoo, a South Korean packaging maker, to see a tripling of inquiries for paper-based options according to Reuters.
China's new home prices fell 0.2% in March from the previous month, extending their decline despite some improvement in major cities. Government-backed China Vanke posted a net loss of about 88.6 billion yuan for 2025 and is seeking to extend an onshore bond maturing this month.
While the economic data showed signs of resilience, analysts warn that the international environment remains complex and volatile due to the ongoing conflict in Iran according to Mao Shengyong, deputy head of NBS. The war has also led Chinese officials to consider curbing exports of advanced solar manufacturing equipment to the United States.
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