Growth Dragons Weekly: China Beat GDP Expectations, Chip Output Rose 40%, More IPOs Coming
What happened in China this week:
China's Q1 2024 GDP Growth of 5.3% Exceeds Expectations
China’s Chip Output Rose By 40%
Hong Kong Approves Bitcoin and Ether ETFs
ChaBaiDao, Ximalaya, and Mobvoi Announce IPOs
#1 China's Q1 2024 GDP Growth of 5.3% Exceeds Expectations
China’s GDP growth in Q1 was 5.3% which beat expectations. Many economic indicators recorded growth with only producer prices decline.
Agricultural, industrial production and manufacturing growth. The value added of agriculture had an increase of 3.8% with increasing area for planting rice and corn. Output of beef, mutton, poultry also increased with only a slight drop in output of pork. This suggests that consumers are increasing their spending.
Next, the total value added of industrial enterprises grew by 6.1% year on year. Within the sectors, mining grew by 1.6%, manufacturing grew by 6.7%, production of necessary resources like electricity, thermal power, etc. grew by 6.9%. As the essential resources are increasing production, it provides a strong foundation for recovery. The products that recorded the strongest growth are electric vehicle charging facilities, 3D printing devices which went up by 41.7% and 40.6% respectively, showing the high demand of these technologies.
The market sales and service sector also grew. Total retail sales of consumer goods grew by 4.7% to 12,031 billion yuan where both rural and urban recorded strong growth of 4.6% and 5.2% respectively, suggesting a good distribution of wealth amidst recovery. Services such as software and information technology services, transport, accommodation and catering grew by 5% year on year as a whole.
There was increased investment in fixed assets and high tech industries which were 4.5% and 11.4% year on year. This is important because such growth translates to increasing productivity which will be crucial in continually driving growth without the need for excessive fiscal deficit. These figures do not include the investments in real estate as the downturn continues to plague the market with total sales of new commercial buildings down by 27.6%.
The unemployment remains roughly stable and the nationwide per capita disposable income of residents' real growth increased by 6.2% year on year to 11,539 yuan. This strong growth suggests that consumption remains weak due to CPI remaining the same as last year.
China is increasingly looking towards international trade to drive growth while solving internal market weakness. China continues to hold on to its net export position as its total export value is 5737 billion yuan and total import value is 4431 billion yuan, both grew by 4.9% and 5% respectively. The Belt and Road Initiative plays a big part for the growth as it grew by 5.5% which accounts for 47.4% of total import and export value. Most of the exports were mechanical and electrical products which supports the increasing trend of Chinese businesses trying to penetrate international markets to avoid the glut at home.
Overall, the growth is encouraging as it shows that the Chinese are taking their first step in increasing consumption of essential products like food. This will provide an important foundation for the Chinese to move on to purchasing more durable goods and big ticket items that will drive further growth and confidence in the economy.
As usual, Western media have largely dismissed China’s recovery and continue to undermine it by highlighting the issues plaguing the country. It is a case of China’s good data not telling the full picture, but when China’s data is bad, the narrative suggests that China is in trouble. Yes, China has its problems, just like any other country, but the difference is that China is willing to be decisive and take the bitter pill to resolve them. They have been showing results; for example, GDP growth exceeding targets in Q1 is one such instance.
#2 China’s Chip Output Rose By 40%
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