China GDP: Economy shakes off Covid legacy to grow 4.5% in Q1

Hong Kong
Cnn
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The Chinese economy took a good start in 2023, while consumers made a wave of spending after the end of three years of strict pandemic restrictions.

The gross domestic product increased by 4.5% in the first quarter compared to a year ago, according to the National Bureau of Statistics on Tuesday. This beat the estimate of 4% growth in a reuters survey of economists.

But private investment has barely moved and youth unemployment has reached the second higher level, indicating that employers in the country’s private sector are still wary longer -term perspectives.

Consumption has displayed the strongest rebound. Retail sales jumped 10.6% in March compared to the previous year, the highest level of growth since June 2021. During the months of January to March, retail sales increased by 5.8%, mainly increased by an increase in income from the catering services industry.

“The combination of a regular increase in consumer confidence as well as the release of repressed demand for refoulement suggest that the consumer’s resumption still has room to function,” said Louise Loo, economist in China for Oxford’s economy.

Industrial production has also shown a regular increase. It increased by 3.9% in March, against 2.4% during the period from January to February. (China generally combines its economic data for January and February to take into account the impact of the Lunar New Year Holidays.)

Last year, GDP extended by just 3%, seriously missing the official growth objective of “approximately 5.5%” because the Beijing approach to eliminate the coronavirus has wreaked havoc on supply chains and hammered consumption expenses.

After the Mass Street demonstrations seized the country and local governments lacked cash to pay huge invoiced invoices, the authorities finally suppressed zero-degree policy in December. After a brief period of disruption due to a vague cocovated, the economy began to show signs of recovery.

Last month, an official non -manufacturing activities gauge jumped at its highest level in more than a decade, suggesting that the crucial sector of the country’s services benefited from a resurgence of consumption expenditure after the end of pandemic restrictions.

While the economic recovery is gaining ground, investment banks and international organizations have improved China’s growth forecasts for this year. From its global economic perspectives published last week, the International Monetary Fund said that China “bounced strongly” after the reopening of its economy. The country’s GDP will increase by 5.2% this year and 5.1% in 2024, he predicted.

However, some analysts believe that the strong growth reported in the first quarter was the product of the “return” of the economic activity of the fourth quarter of 2022, which was increased by pandemic restrictions, then a chaotic reopening.

“Our basic opinion is that the Chinese economy is a deflationist,” said Raymond Yeung, chief economist for Greater China at Anz Research, in a Tuesday research report.

If adjustments are made to take into account the impact of delayed economic activity, GDP growth in the first quarter could only have been 2.6%, he said.

Some key data published Tuesday support this idea. For example, private investment was extremely low.

The investment in fixed assets in the private sector increased only by 0.6% from January to March, indicating a lack of confidence among entrepreneurs. (The investment led by the State, on the other hand, increased by 10%.) It is even worse than the growth of 0.8% recorded during the period from January to February.

The Chinese government has used surprising measures to restore the confidence of private entrepreneurs, but the campaign has inspired more nervousness than optimism.

The very important real estate industry is also mired in a deep slowdown. Investment in property decreased by 5.8% in the first quarter. Sales of goods per floor surface decreased by 1.8%.

“The domestic economy is restored well, but the constraints of insufficient demand is still obvious,” said Fu Linghui, spokesperson for the NBS, at a press conference in Beijing on Tuesday. “The prices of industrial products are still down and companies are faced with many difficulties in their profitability.”

Unemployment continued to increase Among the young people.

The unemployment rate of young people aged 16 to 24 reached 19.6% in March, for a third consecutive month. It was the second highest ever recorded, only behind the 19.9% ​​level reached in July 2022.

The high unemployment rate among young people suggests “relaxation in the economy,” said Yeung.

“In June, there will be a new share of graduates looking for jobs. The condition of unemployment could get more worse if China’s economic momentum,” he added.

The Chinese Ministry of Education previously estimated that a record of 11.6 million university graduates will seek jobs this year.

During the month’s meeting of the National People’s Congress, the country’s rubber parliament, the government has established a cautious growth plan for this year, with an objective of GDP of around 5% and a target of job creation of 12 million.