China's economy continued to consolidate its expansion in May, with numerous positive factors amassing, said National Development and Reform Commission (NDRC) spokesperson Li Chao on Tuesday. This statement followed the release of May's economic performance data, which indicated that the world's second-largest economy is on a steady recovery track.

According to data from the National Bureau of Statistics (NBS) released on Monday, the output of industrial enterprises above the designated size (those with annual business revenue of more than 20 million yuan or $2.76 million) grew by 5.6 percent year-on-year, while retail sales rose by 3.7 percent. Additionally, fixed-asset investment for the first five months of the year increased by 4 percent year-on-year, slightly down from the 4.2 percent growth seen in the first four months.

Li Chao addressed concerns about the relatively modest growth in retail sales and investment, stating that China's economy is further consolidating its expansion trend seen in May, thanks to a range of supportive policies. "Although specific metrics have shown fluctuations, many indicators improved in May compared with April," Li noted, highlighting improvements in production, industrial profitability, domestic demand, exports, employment, and consumer prices.

Similarly, NBS spokesperson and chief economist Liu Aihua emphasized the overall positive trajectory of the economy in May. Liu noted that fixed-asset investment maintained steady growth and saw structural optimization. In the first five months, fixed-asset investment grew by 4 percent year-on-year, driven by a 9.6 percent increase in manufacturing investment. Equipment and technical transformation investments also saw significant gains, with a 17.5 percent rise in equipment purchases and a 10 percent increase in manufacturing technological upgrades.

Liu highlighted that high-tech industry investment continued to accelerate, with investments in electronics, communications, aerospace equipment manufacturing, and information services all showing robust growth. Large projects also played a crucial role, with investments in projects worth over 1 billion yuan rising by 8.5 percent, driving overall investment growth.

Both officials acknowledged the rising complexity and uncertainty in the external environment but emphasized the government's efforts to implement key strategies, enhance security capacity in crucial sectors, and promote equipment upgrades and consumer goods trade-in programs. From January to May, investment in purchasing equipment and appliances surged by 17.5 percent year-on-year, contributing over 50 percent to total investment growth. Sales revenues from home appliance trade-in programs on major e-commerce platforms also increased by more than 80 percent annually.

Furthermore, Li Chao reported that construction work had begun on 80 percent of the projects supported by the 1 trillion yuan in treasury bonds issued in late 2023, up from 72 percent in mid-May. Analysts believe that these projects, coupled with equipment upgrade programs and improving external conditions, will support economic growth in the second quarter and beyond.

Wen Bin, chief economist at China Minsheng Bank, told that China's export strength will continue to gain momentum amid resilient global demand, benefiting relevant industries. Wen projected that supportive policies, especially fiscal measures, would continue to expand demand and bolster recovery, potentially driving second-quarter GDP growth to 5.5 percent.

Sun Chuanwang, a professor at Xiamen University, shared a similarly positive outlook, predicting that expanding investment, recovering demand, and stable exports would drive second-quarter growth. "Large-scale equipment updates have provided strong support for manufacturing investment growth, alongside the leverage effect of government funds," Sun said, estimating that second-quarter GDP growth could be 0.1-0.3 percentage points higher than the first quarter.

Liu Aihua also noted that international organizations, including the World Bank and the International Monetary Fund, have raised their growth forecasts for China's economy, reflecting global confidence in China's economic prospects. Liu concluded that despite external complexities and domestic challenges, the economy's fundamental strengths and supportive policies are expected to sustain its recovery momentum in the coming months.

China's GDP grew by 5.3 percent year-on-year in the first quarter, and officials are optimistic about maintaining and potentially surpassing this growth rate in the second quarter, supported by ongoing investments and policy measures aimed at stimulating high-quality development. Investors are keenly watching the upcoming third plenary session of the 20th Communist Party of China Central Committee in July for further policy directions to sustain economic vitality.