China's National Bureau of Statistics on Friday reported first-quarter GDP growth of 5.1% year-over-year, beating the 4.8% consensus and accelerating from 4.6% in Q4 2025. The print marks China's strongest quarter since Q2 2023 and reflects the substantial impact of the $850 billion fiscal stimulus package announced at March's National People's Congress combined with targeted property-market interventions.
March industrial production grew 6.8% year-over-year versus 5.9% expected, while retail sales climbed 5.2% against a 4.4% consensus. Fixed-asset investment advanced 4.8%, supported by a 28% surge in infrastructure spending tied to the stimulus. Property investment, long a drag on headline growth, narrowed its year-over-year decline to negative 2.1% from negative 4.3% in February — the best reading in three years.
Property Market Begins to Stabilize
New home prices rose 0.2% month-over-month in March across 70 major cities — the first positive reading since June 2023. Sales volumes rebounded 18% year-over-year in tier-1 and tier-2 cities, where PBOC-backed mortgage rate cuts and government-purchase programs of unsold inventory have begun to clear market overhang. Country Garden and Shimao Group both reported their first positive quarterly operating cash flow since 2022.
The PBoC held its 1-year loan prime rate at 3.0% and the 5-year at 3.5% earlier this week. Governor Pan Gongsheng signaled at a press conference that additional targeted cuts remain on the table if property and consumption data lose momentum. The central bank has also quietly accelerated its gold-reserve accumulation program, as reported in the latest World Gold Council data.
Global Investors Return to China
The CSI 300 index rose 2.6% on Friday to 4,188 — its highest level in 14 months — while the Hang Seng jumped 3.1% to 23,842. Net foreign equity inflows via Stock Connect totaled $8.4 billion in the week, the strongest since June 2024. JPMorgan raised its 2026 China GDP forecast to 5.0% from 4.5%, and Morgan Stanley increased its MSCI China target to 78 from 70.
Risks remain substantial. U.S.-China tariff negotiations stalled this week after the Trump administration added 17 Chinese semiconductor firms to the entity list. Trade Representative Jamieson Greer warned that the July tariff cliff remains a "hard deadline" if a comprehensive framework cannot be reached. Additionally, China's youth unemployment rate remained elevated at 14.8%, down only marginally from 16.1% at year-end 2025.