China's economy achieved a positive start in the first quarter of 2026, with accelerated growth in production supply, continued improvement in market demand, moderate price recovery, and high-quality development advancing with new and superior dynamics. New growth drivers expanded rapidly, showcasing the economy's strong resilience and vitality. However, the external environment remains complex and volatile, while domestic structural imbalances between strong supply and weak demand persist, requiring further efforts to consolidate the foundation for sustained economic improvement. Moving forward, precise and effective implementation of more proactive fiscal policy and appropriately accommodative monetary policy will be essential. Strengthening the role of active fiscal policy in stabilizing growth and adjusting structure, systematically addressing development challenges, and stimulating endogenous growth momentum with a focus on boosting consumption will be crucial to consolidating and expanding the steady, positive economic trajectory.

Economic operations commenced strongly with overall stable growth momentum. First, China's economy registered a solid start in Q1. Preliminary calculations indicate China's GDP reached 33.4 trillion yuan, representing a 5.0% year-on-year increase at constant prices, with major indicators exceeding expectations. Specifically, value-added of the primary industry rose 3.8% year-on-year, contributing 2.6% to economic growth; secondary industry increased 4.9%, contributing 34.1%. Industrial value-added grew 6.1%, driving 1.9 percentage points of GDP growth and accounting for 30.9% of GDP. Manufacturing value-added within industry expanded 6.3%, outperforming other industrial sectors. Tertiary industry grew 5.2%, contributing 63.2% to economic growth.

Second, market sales accelerated slightly, with service consumption showing strong momentum. In Q1, total retail sales of consumer goods approached 13 trillion yuan, up 2.4% year-on-year. Necessities consumption demonstrated resilience, with retail sales of grain, oil, and food products in units above designated size growing 10.0%. Meanwhile, discretionary consumption improved significantly, with retail sales of communication equipment and cultural/office goods rising 20.8% and 9.3% respectively under trade-in policy incentives, showing lifestyle-oriented characteristics. Rural consumption outperformed urban consumption, narrowing the urban-rural gap. Rural retail sales grew 3.1% while urban sales increased 2.3%.

Service consumption remained robust, and online consumption maintained positive development. Service retail sales grew 5.5% year-on-year in Q1, maintaining the same pace as 2025. Online retail sales of goods increased 7.5%, accounting for 24.8% of total consumer retail sales.

Third, manufacturing investment steadily recovered, and industrial production growth accelerated. Manufacturing investment rose 4.1% year-on-year in Q1, contributing to investment and economic growth. High-tech manufacturing investment increased 5.2%, with investment in computer and office equipment manufacturing surging 28.3%, aerospace equipment manufacturing up 19.0%, and electronic/communication equipment manufacturing growing 6.6%. The acceleration in manufacturing investment correlates with improved corporate investment profitability and relatively accommodative monetary conditions. Industrial value-added above designated size grew 6.1% nationally, with equipment manufacturing value-added rising 8.9%, highlighting its stabilizing role.

Leading indicators show improved manufacturing sentiment. The March Manufacturing PMI reached 50.4%, up 1.4 percentage points from February, indicating recovering activity. The new orders index stood at 51.6, reflecting significantly improved market demand; the production index reached 51.4 and purchasing volume index 50.9, indicating accelerated manufacturing activity. Input prices index reached 63.9, while output prices index recovered to 55.4, suggesting significant imported price pressures. Large enterprises' PMI was 51.6%, demonstrating resilience, while medium and small enterprises' PMI rose 1.5 and 4.5 percentage points respectively, showing notable improvement.

Fourth, infrastructure investment rebounded significantly, providing strong economic support. Infrastructure investment grew 8.9% year-on-year in Q1, 7.2 percentage points higher than overall investment growth, contributing 2.7 percentage points to total investment growth. This stems from three factors: concentrated commencement of major projects in the first year of the 15th Five-Year Plan; accelerated issuance and utilization of ultra-long special treasury bonds and local government special bonds, with funds directed toward municipal/industrial park infrastructure, transportation infrastructure, and affordable housing; and substantial expansion of new policy financial instruments, effectively addressing capital gaps in major infrastructure projects while leveraging private capital participation.

Fifth, import-export trade grew rapidly, with manufacturing competitiveness supporting exports. China's exports totaled $977.49 billion in Q1, up 14.7% year-on-year, significantly exceeding market expectations. Regionally, Guangdong, Jiangsu, Zhejiang, Shanghai, and Shandong contributed over 60% of import-export growth. Equipment manufacturing products accounted for over 60% of export value in RMB terms, with increasing innovation attributes and enhanced global competitiveness in electromechanical products and new energy industries. Imports reached $713.16 billion, up 22.7% year-on-year, driven by domestic demand recovery and more balanced internal-external demand growth.

Export growth reflects multiple factors including recovering external demand, complete domestic industrial supporting systems, and unleashed corporate innovation momentum. China's manufacturing offers ample capacity, quality products, competitive pricing, and strong market adaptability, meeting diverse global production and consumption needs. Chinese enterprises' enhanced global expansion capabilities and industrial globalization efforts further contributed to export improvement.

Sixth, market prices continued improving. Q1 CPI rose 0.9% year-on-year, 0.4 percentage points higher than Q4 2025. Core CPI excluding food and energy rose 1.2%, indicating reduced deflationary pressures. PPI fell 0.6% year-on-year in Q1, with narrowing decline. Influenced by rising international commodity prices and improved supply-demand dynamics in certain sectors, March PPI increased 1.0% month-on-month and 0.5% year-on-year.

Seventh, aggregate financing to the real economy showed optimized structure. Q1 aggregate financing reached 14.83 trillion yuan, remaining at relatively high historical levels. Loan scale maintained reasonable growth with continuously optimized credit structure; capital market development progressed, significantly increasing direct financing proportion. By end-March, M2 money supply grew 8.5% year-on-year, 1.5 percentage points higher than same period last year, reflecting accommodative monetary policy stance and supportive financial conditions for the real economy.

Revenue maintained steady growth while expenditure front-loaded. Q1 fiscal revenue and expenditure operations started positively, with general public budget revenue showing significant growth and expenditure pace being the fastest in nearly five years, emphasizing "investment in people."

First, general public budget revenue growth exceeded the average of past three years. National general public budget revenue reached 6.1613 trillion yuan, up 2.4% year-on-year. Central government revenue was 2.4991 trillion yuan (up 2.7%), while local government revenue reached 3.6622 trillion yuan (up 2.1%).

Tax revenue totaled 4.8505 trillion yuan, up 2.2%, benefiting from industrial-service sector growth and PPI recovery. The top five taxes—domestic value-added tax, corporate income tax, personal income tax, domestic consumption tax, and import-related VAT/consumption tax—accounted for over 90% of tax revenue. VAT grew 4.9%, indicating improved national economic circulation, particularly positive impacts from price recovery.

Second, general public budget expenditure pace was the fastest in five years, with structure emphasizing "investment in people." National general public budget expenditure reached 7.4706 trillion yuan, up 2.6% year-on-year. Central government expenditure was 914.9 billion yuan (up 4.9%), while local government expenditure reached 6.5557 trillion yuan (up 2.3%). Expanded fiscal expenditure scale and accelerated pace demonstrate front-loaded active fiscal policy.

Expenditure structure shows people's livelihood spending growing faster than infrastructure spending, with social security/employment expenditure up 9% and health expenditure rising 12.1%. Economically, "investment in people" aligns with current economic characteristics. Research shows livelihood expenditures, particularly transfers to low-middle income groups, have significantly higher consumption stimulus effects than traditional infrastructure investment. After decades of intensive accumulation, traditional infrastructure investment faces diminishing marginal returns, while livelihood spending's consumption multiplier effect is more pronounced. Direct income increases through childcare subsidies and pension adjustments for low-middle income groups convert to consumption expenditure at higher rates. Q1 policy effects will gradually manifest in subsequent quarters.

Utilizing macroeconomic policies effectively to further consolidate economic stabilization foundation. China's economic recovery continues steadily with accumulating high-quality development momentum. Addressing existing challenges requires full utilization of macroeconomic policies, deeper挖掘 domestic demand potential, and further consolidating the foundation for sustained economic improvement.

First, boosting consumption remains key to promoting economic growth. Multi-dimensional measures targeting income, expectations, and asset prices should be implemented precisely. Policies supporting resident income growth should be studied, prioritizing development of productive and consumer services to enhance employment elasticity per unit GDP. Social welfare mechanisms for social security, healthcare, and pensions should be improved to strengthen social safety nets, boost consumer confidence, and increase consumption propensity.

Second, macroeconomic policies must maintain active stance to promote steady economic progress. Given domestic supply-demand imbalances, policies should maintain proactive stance, avoiding premature withdrawal. More active fiscal policy and appropriately accommodative monetary policy should support consumption recovery and investment rebound. Structural cost-reduction policies should address upstream price transmission and profit squeeze on mid-downstream sectors, implementing targeted tax cuts/fee reductions for downstream manufacturing, services, and SMEs, while guiding policy financial institutions to increase sectoral support.

Third, precisely implement more active fiscal policy. Active fiscal policy helps stimulate growth, serving counter-cyclical调节 role on demand side and structural adjustment role on supply side. At aggregate level, support building strong domestic market, closely integrating livelihood benefits with consumption promotion, and balancing physical and human capital investment to achieve consumption-investment良性循环. Structurally, use fiscal policy to develop new quality productive forces, accelerate high-level科技自立自强, enhance livelihood保障, advance rural revitalization, promote regional coordination, and drive comprehensive green transformation.