China's economic growth topped expectations in the first quarter, official data showed on Thursday, even as the global economy reels from the fallout of war in the Middle East.

Gross domestic product grew 5 percent year on year, data from the National Bureau of Statistics showed on Thursday, with GDP reaching 33.4 trillion yuan.

The country has set the target for 2026 growth at 4.5 percent to 5 percent and will strive for better in practice, the bureau said.

On a quarterly ⁠basis, GDP ‌grew 1.3 percent in the first quarter, matching forecasts and ‌just ahead of the 1.2 percent gain in ⁠the final quarter of last year.

In the first quarter, "the growth of production and supply accelerated, market demand continued to improve, employment was generally stable, market prices picked up moderately, and high-quality development advanced with new and positive momentum," the bureau said in a statement.

"The national economy got off to a good start with the development showing greater resilience and vitality."

Deputy bureau chief Mao Shengyong told reporters at ⁠a press briefing that domestic demand contributed to 84.7 percent of GDP growth for the quarter.

He said the economy started this year on a good footing despite a ⁠complex and severe external environment, calling the achievement "rare and commendable".

The impact ⁠from volatile global oil ⁠prices has been relatively ⁠small on the world's second-largest economy, he said.

Retail sales of consumer goods, a major indicator of the country's consumption strength, expanded, on a year-on-year basis, 2.4 percent in the first quarter and 1.7 percent for March.

Value-added industrial output expanded 6.1 percent in the first quarter. The pace was 1.1 percentage points faster than the fourth quarter of last year.

For March, output was 5.7 percent, beating forecasts for 5.5 percent growth. On a monthly basis, industrial output grew 0.28 percent in March.

The industrial output is used to measure the activity of large enterprises with an annual main business turnover of at least 20 million yuan.

A breakdown of the data showed that the mining sector's value-added output increased by 6 percent year on year in the first quarter, while that of the manufacturing sector grew by 6.4 percent.

The value-added output of the electricity, heat, gas, and water production and supply sectors rose by 4.3 percent.

Fixed-asset investment went up 1.7 percent year on year in the first quarter to hit 10.27 trillion yuan, reversing the 3.8-percent decline recorded for the whole of last year.

Investment in infrastructure construction rose 8.9 percent from a year ago during the period, and manufacturing investment increased 4.1 percent.

Excluding the property sector, the country's fixed-asset investment rose 4.8 percent.

Investment in property development decreased 11.2 percent, with the floor space of newly-built commercial buildings sold being 195.25 million square metres, down by 10.4 percent.

The total sales of newly-built commercial buildings were 1.7262 trillion yuan, down by 16.7 percent.

The surveyed urban unemployment rate in China averaged 5.3 percent in the first quarter, maintaining the same level as a year ago.

Commenting on the data, Tianchen Xu, senior economist at Economist Intelligence Unit, said the robust growth came on the back of strong exports, which rose by 14.7 percent year on year in the first quarter, despite geopolitical uncertainties.

He dismissed concerns that the Iran war might weigh on the sector's growth, saying weak performance in March was due to delayed production at factories following the Lunar New Year holiday.

"The overall production cost is still relatively lower as the oil prices are rising across the world, which means firms in Southeast Asia, from Japan or South Korea, they are also grappling with the higher oil prices," he said.

"In relative terms, China's producers still have a very good access to all supplies, and they have the advantages of a lower cost in terms of labour, land, and lower credits. That means Chinese exports would remain highly competitive despite all turbulences."

Xu said the global energy shock would have a "moderate" impact on the world's second largest economy, as the country's energy and oil reserves can cope with domestic needs for around six months.

"China also has very diversified supplies - not only from the Middle East, but also from Russia, Brazil, and even from the United States and Africa. That will help sustain China's industrial sector," he said.

"But there will be some pressure on firms' profitability, as we can see from the latest inflation data, the producer prices rose quite a lot, but there haven't been much increases in consumer prices.

"That means factories and manufacturers were mostly absorbing the rise in the oil prices."

Xu forecast that the country's economy will grow by 4.6 percent year on year in 2026, noting that the latest quarterly data fell at the high-end of the country's annual growth target of between 4.5 percent and 5 percent, indicating positive signals.



(Additional reporting by Xinhua & Reuters)



Edited by Thomas McAlinden