FirstFT: China’s economy beats forecasts to grow 4.5% in first quarter

Stocks in Europe are in positive territory today and commodity prices are firmer after China’s first quarter economic growth exceeded forecasts following a rebound in domestic consumption and a surge in exports.

The world’s second-largest economy expanded by 4.5 per cent in the first three months of the year, according to the National Bureau of Statistics, which exceeded analyst expectations of a 4 per cent rise.

The increase in output follows efforts by the government in Beijing to restore business confidence damaged by pandemic controls and abrupt policy changes. Last year growth missed the official target of 5.5 per cent, expanding by just 3.3 per cent, the lowest level since the beginning of the pandemic.

“The national economy showed a steady recovery and made a good start [to the year],” China’s National Bureau of Statistics said in a statement today. But the agency cautioned “inadequate domestic demand remains prominent and the foundation for economic recovery is not solid yet”.

China’s rebound is crucial to global economic growth this year as developed nations grapple with persistently high inflation, rising interest rates and sluggish expansion in the wake of the pandemic and Russia’s full-scale invasion of Ukraine.

Global stock markets made moderate gains following the release of the data. The pan-European Stoxx 600 index gained 0.2 per cent. In Asia, Japan’s benchmark Topix rose 0.7 per cent. The CSI 300 index of Shanghai- and Shenzhen-listed shares closed up 0.3 per cent but the Hang Seng index in Hong Kong fell 0.8 per cent.

China’s commodities markets also responded positively to the data. Iron ore futures traded in the north-eastern Chinese city of Dalian jumped as much as 3.5 per cent to Rmb794.5 ($116) a metric tonne while Shanghai-traded contracts for steel rebar rose as much as 1.9 per cent to Rmb3,981 a metric tonne.

In global commodities markets Brent crude oil edged higher after a 2 per cent fall yesterday. The dollar index, which measures the performance of the US currency against six other currencies, fell 0.2 per cent.

US futures were tipped to open flat, with the blue-chip S&P 500 and tech-heavy Nasdaq poised to make minimal gains.

For more on what today’s release means for China and the global economy, read the five main takeaways.

Here is what else I will be keeping tabs on today:

• Earnings: Goldman Sachs and Bank of America are the latest banks to report. There are also earnings from Johnson & Johnson, Netflix, and United Airlines.

• Gensler: Securities and Exchange chair Gary Gensler will testify before the House Financial Services Committee and is expected to face questions on the oversight of cryptocurrency.

• Dominion vs Fox: The defamation trial against Fox News starts after it was delayed yesterday following a report of last-minute settlement talks.

• WSJ reporter: Evan Gershkovich’s lawyers are set to appeal against his detention in Russia on charges of espionage.

Five more top stories

1. US groups Charles Schwab, State Street and M&T suffered almost $60bn in combined bank deposit outflows in the first quarter. The deposit flight was turbocharged by last month’s banking sector turmoil. Read the full story.

2. Tim Cook has opened the first Apple Store in India as the iPhone maker steps up its battle with Samsung over the growing luxury smartphone market in Asia’s second-biggest economy. Apple accounted for just under 5 per cent of total handsets sales in India last year.

3. EY told staff it will cut 3,000 jobs in the US to eliminate “overcapacity”, with the axe mainly falling on its consulting arm. The redundancies, announced less than a week after the collapse of plans to split the Big Four firm, account for about 5 per cent of EY’s US workforce.

4. One of the US’s biggest public pension plans is set to write down its $52bn property portfolio in the latest sign that higher interest rates and the recent banking turmoil are causing pain in the sector. The chief investment officer of the California State Teachers’ Retirement System spoke to the Financial Times.

5. US House Speaker Kevin McCarthy yesterday sought to gain the upper hand in negotiations with the White House over raising the debt ceiling. In a speech at the New York Stock Exchange he accused the Biden administration of “stonewalling” him. Read more of his comments here.

The deep dive

On one side of the conflict in Sudan is the president of Sudan’s military government, who has the backing of Egypt and boasts powerful ground and air forces. Opposing him is Sudan’s vice-president who oversees the paramilitary Rapid Support Forces and has powerful Gulf backers. The two men hold the fate of Sudan in their hands.

We’re also reading . . . 

• ‘Nobody has done more than me to fight corruption’: In an interview with the FT, Ecuador’s president Guillermo Lasso defends himself against accusations of corruption.

• Migrant workers: Labour shortages and demographic pressures are fuelling a competition between countries to attract skilled people, writes Sarah O’Connor.

• China-Vatican tensions: A deal between the Vatican and China over the church’s role in the communist state appears to be fraying.

Chart of the day

Investors are betting on further weakness in the US dollar after its recent declines, as the fallout from last month’s banking crisis limits how far the Federal Reserve can raise interest rates and US investors hunt overseas for returns.

Take a break from the news

We recently asked FT readers to share their favourite urban running routes. Responses came in from around the world, extolling the joys of pounding the pavement in cities from Athens to Zurich. Find your next running route here.

Additional contributions by Tee Zhuo and Emily Goldberg