The first-quarter result, announced by the National Bureau of Statistics on Tuesday, was slightly above the 5.2% in the last quarter of 2023. It comfortably beat the average forecast of 4.5% by 31 economists in a poll carried out by Nikkei last month.
The momentum creates a "strong foundation" for achieving annual development targets, the bureau said in a statement. China is officially aiming for GDP growth of "around 5%" this year.
On a quarterly basis, the first-quarter GDP grew by 1.6%, higher than the 1.2% recorded for the previous term.
Manufacturing and the supply of utility services -- including electricity, thermal power, gas and water -- drove a 6.1% expansion in industrial production, the bureau said. Agricultural production, value-added information services and transport-backed services also saw sustained growth.
Total retail sales of consumer goods, a gauge on household spending, grew by 4.7%, mainly supported by food catering. But growth in demand for consumer products slowed to 3.1% in March, compared to 5.5% in the first two months of the year, underscoring consumers' subdued confidence over the economic outlook.
Tuesday's data release reflects "broad manufacturing outperformance, festivities-boosted household spending, and the feedthrough of easy policy settings onto investments," according to Louise Loo, China economist at Oxford Economics.
Last month, the Chinese government vowed to implement targeted measures to sustain business confidence as it set a growth target of "around 5%" for 2024. Chinese officials said last week that the government will offer "strong" financial support to encourage large-scale renewals of industrial equipment and trade-ins of consumer goods, projecting an annual market value for such upgrades of over 5 trillion yuan ($690 billion).
However, a 19.4% drop in new housing sales continued to weigh on fixed-asset investment, which grew by 4.5%. Excluding property, the reading swelled 9.3%, thanks to infrastructure and manufacturing spending.
The GDP acceleration comes despite well-reported challenges dragging on China's recovery from the COVID-19 pandemic. Data released last week showed the country's exports in March fell 7.5% on softer demand for key goods, including mechanical products and garments. Meanwhile, deflationary pressure emerged again, as consumer inflation ticked up only 0.1%.
Though global factory activity has strengthened recently, and could lead to more demand for Chinese products, Citi Research warned on Friday of renewed protectionism risks ahead of the U.S. presidential election in November.
After the GDP announcement, Goldman Sachs issued a note saying, "We believe continued policy easing is still necessary, especially on the demand-side ... given structural challenges from [the] property downturn, still-fragile confidence and [local government financing vehicle] deleveraging."
Capital Economics' China economist Zichun Huang observed that the "recovery clearly remains fragile."
"While we expect short-term fiscal stimulus to continue [to] support the economy, this is unlikely to prevent a renewed slowdown," Huang wrote. "And the economy is facing structural headwinds, particularly in [the] real estate sector."
Later on Tuesday, China's regulators urged financial institutions to support the manufacturing sector with separate credit plans.
The statistics bureau, in its announcement, warned that the external environment could become more complex and that the foundation for stable expansion is "not solid yet."