China's economy surpassed expectations in the first quarter of the year, according to official data released today, Tuesday by the National Bureau of Statistics of China.

Specifically, the GDP grew by 5.3% year-over-year in the first quarter, higher than the 5.2% in the fourth quarter of 2023 and above the 4.6% economists had predicted in a Reuters poll.

On a quarterly basis, China's GDP increased by 1.6% in the first quarter, compared to Reuters' expectations of a 1.4% rise and the revised 1.2% expansion in the fourth quarter. Beijing has set a growth target of about 5% for 2024.

This growth is partly due to external demand, as export volumes rose by 14% year-over-year, stated Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management. He mentioned that the strong first-quarter growth would likely make the government comfortable with its current policies.

"With the likelihood of Fed interest rate cuts diminishing, I think the chances of the People's Bank of China lowering rates are also reducing," Zhang added.

However, March's industrial output rose by only 4.5% year-over-year, missing expectations of 6%. Retail sales increased by 3.1% year-over-year, lower than the anticipated 4.6%.

The weaker-than-expected rise in industrial production in March was linked to a subdued pace of industrial capacity utilization, while the slowdown in retail sales was "unexpected," according to Bruce Pang, Head Economist and Head of Research for Greater China at real estate and investment management firm JLL.

Unemployment in major cities dropped to 5.2%, breaking a three-quarter trend of increases.

Last week, Morgan Stanley raised its forecast for China's real GDP in 2024 to 4.8%, up from the previously expected 4.2%.

Meanwhile, China's property sector continued to show weakness, with real estate investments declining by 9.5% year-over-year in the first quarter.

The area of new commercial buildings sold was 226.68 million square meters, marking a 19.4% decrease year-over-year. During the first three months of the year, former real estate giant Evergrande was ordered to liquidate, and Country Garden Holdings faced a liquidation application.

China Vanke recently reported in a meeting with analysts that it is experiencing "operational difficulties" and "short-term liquidity pressures."

Despite the faster-than-expected expansion of China's economy, the pace is "unbalanced," Pang remarked. "Optimism is likely to be tempered by sluggish domestic demand, which will be the main weak point," he added.