In 2023, China's economy began strongly, but maintaining growth is difficult without broader enhancements. The forthcoming official data is expected to reveal a 4.8% increase in GDP in the first quarter, showing the potential to reach the annual growth target of 5%. While there are positive indications in trade and manufacturing, a decrease in March exports and dependence on foreign demand emphasize the necessity for an increase in domestic spending.

China has started the year with enthusiasm, with its factories operating at full capacity. However, sustaining this momentum might be a challenge without substantial improvements in various sectors. Tuesday is expected to bring a deluge of official data that could confirm whether the Chinese economy is recovering after a prolonged slump following the pandemic.

Forecasts from a Bloomberg survey suggest a 4.8% GDP increase in the first quarter compared to the previous year, raising hopes that the country may meet its 5% growth target for the year. Recent improvements in trade and manufacturing have prompted economists from major financial institutions to revise their economic forecasts for 2024.

Despite the positive signs in industrial sectors, China's real estate market continues to face difficulties. The sales of residential buildings saw a significant decline, indicating possible further contractions in March. Meanwhile, while nominal GDP growth appears strong initially, deflationary pressures are affecting the economy, as evidenced by the declining GDP deflator.

The credit sector in China is also showing strains, with new bank loans increasing at a slow rate in March, pointing to a lack of confidence in the economic recovery. The labor market remains a concern, with high unemployment rates, particularly among young people. Despite some sectors reporting wage increases, there are also reports of wage freezes and layoffs, dampening hopes for a quick recovery. However, the rise in wages in certain sectors may indicate a tightening job market and the start of an economic rebound.