China's economy expanded 5.4% year-over-year in the first quarter, the National Bureau of Statistics reported Friday, beating the 5.0% consensus forecast and accelerating from the 5.1% pace recorded in Q4 2025. The print marks the third consecutive quarter of accelerating growth and validates the policy stimulus rolled out by the Politburo in late 2025.
The CSI 300 Index surged 3.4% to 4,624 on the data, while the Hang Seng Index in Hong Kong jumped 4.1% to 24,840 — the highest level since 2021. The yuan offshore strengthened to 6.94 per dollar, reflecting reduced capital outflow pressure. Onshore Chinese government bond yields rose 6 basis points as markets pared expectations for further rate cuts from the People's Bank of China.
Property Stimulus Working
The previously-announced 2 trillion yuan property stimulus package, which combines a 1.2 trillion yuan central-government bond issuance to fund unsold inventory acquisitions plus 800 billion yuan in PBOC re-lending facilities, has begun showing measurable impact. Housing starts rose 18% year-over-year in March, the first increase in 14 months, while completed sales advanced 11% — the strongest reading since the property bust began in 2021.
Tier-1 cities including Beijing, Shanghai, and Shenzhen recorded month-over-month price increases for the first time since June 2023, with average new-home prices in Beijing rising 0.4% sequentially. The recovery remains uneven across tiers, however, with Tier-3 and Tier-4 cities continuing to record price declines, albeit at moderating pace.
Consumer and Industrial Strength
Retail sales jumped 7.4% year-over-year in March, the strongest single-month reading since 2023, with autos up 14%, household appliances up 22% (boosted by trade-in subsidies), and catering services up 9.8%. Industrial production grew 6.8%, driven by 18% growth in EV manufacturing, 24% growth in semiconductor production, and 9% growth in industrial robotics.
Premier Li Qiang said in a statement that the government will "continue to provide proactive fiscal policy and accommodative monetary policy through 2026 to consolidate the recovery." Goldman Sachs raised its full-year China GDP forecast to 5.2% from 4.7%, while Morgan Stanley's Robin Xing lifted his estimate to 5.0% from 4.5%. Bears warn the export sector faces renewed tariff risks if Trump-Xi trade negotiations falter at the planned June summit.