BEIJING — Following the abrupt conclusion of anti-virus measures, consumers went back to stores and eateries, which increased China's economic development in the most recent quarter.
According to government data issued on Tuesday, the quarter from January to March's increase in gross domestic product was the fastest in the previous year at 4.5%, outpacing the quarter's 2.9% growth.
However, authorities issued a warning that the world's second-largest economy, China, will likely experience import and export pressures in the upcoming months due to an unpredictable global economic environment. They also expressed concern about insufficient domestic market demand.
China's National Bureau of Statistics director general, Fu Linghui, announced on Tuesday that the government would put in place a number of measures to "stabilize growth," boost domestic demand, and encourage the creation of new businesses.
After "zero-COVID" limitations were lifted at the end of 2022, people rushed to restaurants and retail centers, contributing to the quarter's GDP growth that was more than predicted. Economic growth was initially estimated by analysts to be around 4%.
The Chinese government conservatively set this year's economic growth target at "around 5%," which will only be achieved if GDP expands more quickly in the coming months.
Total retail sales of consumer products increased by 10.6% in March compared to the same month last year and by 7.1 percentage points when compared to the first two months of the year.
An economist at Oxford Economics, Louise Loo, wrote in a note that the consumer-led recovery still has space to run. "The combination of a steady uptick in consumer confidence as well as the still-incomplete release of pent-up demand suggest to us that the consumer-led recovery still has room to run," she said.
While retail sales and consumption have increased, other economic indicators like industrial output and fixed asset investments have grown more slowly, signaling an uneven recovery. Insufficient demand is also suggested by slowing price indexes.
When compared to the same month last year, industrial production output, which gauges activity in the manufacturing, mining, and utilities sectors, increased by 3.9% in March.
In order to boost economy, China invests in infrastructure and other projects, and during the first three months of 2023, fixed asset investment increased by 5.1% over the same time in 2012. When compared to the first two months of the year, the growth was down from 5.5%. Private investments only increased by 0.6%, which was equally modest.
According to data released earlier this week, China's exports increased significantly in March, albeit this increase may just be the consequence of suppliers completing contracts that were delayed due to COVID-19. Exports increased by 8.4% in the first quarter.
Urban unemployment decreased to 5.3% in March, a 0.3% decrease from February. However, youth unemployment increased sharply to 19.6%, a nearly record high.
Following years of strict lockdowns and a crackdown on areas like technology and real estate, investors are likely to closely examine China's first-quarter GDP data for signs of revival.
Anti-virus measures that forced sudden lockdowns and kept millions at home, sometimes for weeks on end, caused last year's growth to decline to 3%.
According to Oxford Economic's Loo, GDP is anticipated to increase on an annual basis given Shanghai's COVID-19 lockdowns last year, which had an effect on the economy. However, growth is anticipated to decline in the second half of the year.
"The fading of consumption momentum, the winding down of fiscal stimulus, and a weaker incoming external demand would put downward pressure on domestic growth in H2," she stated.
The interest rate on China's one-year policy loans remained steady on Monday. It had promised to increase support for the economy and keep enough liquidity to promote growth last week.