China’s economy records faster-than-expected growth
China’s economy recorded better-than-expected growth of 4.5% year-on-year in the first quarter of 2023, according to new data from the National Bureau of Statistics (NBS).
The country’s GDP in the first three months hit 28.5 trillion yuan ($4.15 trillion), an increase of 2.2% compared with the fourth quarter of 2022.
“The growth is hard-won against grave and complex international environment,” said NBS spokesperson Fu Linghui. He added that “positive factors kept accumulating in the first quarter”, as supportive policies and measures implemented by the government took effect early on.
Chen Fengying, an economist and former director of the Institute of World Economic Studies, commented: “Overall, the economy showed month-on-month recovery trend in the first quarter, with total retail sales far beating market expectations in March, reflecting that consumer confidence has gradually been restored.”
The country’s total retail sales grew by 5.8% year-on-year in the first quarter, reversing a downward trend of 2.7% year-on-year seen in the fourth quarter of 2022. Specifically, total retail sales increased by 10.6% year-on-year in March, according to NBS data.
“China’s push for innovation in bottle-neck technologies promotes basic and applied research and accelerates digital transformation across various industries, consolidating the growth momentum of the Chinese economy,” said Wan Zhe, an economist at Beijing Normal University
While fixed-asset investment grew 5.1% year-on-year in the first quarter, investment in high-tech industries increased by 16% and the investment in e-commerce rocketed by 51.5%, the data showed. “This indicates China’s economic transformation is accelerating, and we’re ushering in a digital economy and high-tech transformation,” Chen said.
Despite difficult global economic conditions, China’s exports rose by 23.4% percent year-on-year in March, Wan said.
The first quarter GDP figures have led international financial institutions to revise their forecasts for China’s economic growth this year.
“The macroeconomic data for the first quarter of 2023 implies the positive feedback from the Chinese economy on the optimization of Covid-19 prevention measures, and we maintain our optimistic attitude towards China’s economic growth in 2023,” said Darius Tang, Associate Director of Corporates of Fitch Bohua, a subsidiary of Fitch Ratings.
In addition, JP Morgan upgraded its forecast for China to 6.4% year-on-year from a previous prediction of 6%.
Growth rate to speed up
“Looking ahead, China’s economic performance will continue to see overall improvement on the back of strengthening internal momentum and stepped-up policies,” said NBS spokesperson Fu Linghui, who added that China’s economic growth will notably speed up in the second quarter.
“The economy will likely further rebound to as high as 8% between April and June given a lower base the same quarter last year,” Chen said, noting that the full-year GDP growth rate will probably exceed the around 5% target.
“The current Chinese economy does not appear deflated and in the near future deflation is not likely,” Fu said. “Seasonal factors, price drop in international bulk commodities and geopolitics jointly contributed to domestic price drop but the price will recover to a reasonable level along with the disappearance of these factors in the second half of the year,” he said.
With promising prospect for full-year economic recovery, China will provide stronger impetus to the world economy and be a stabilizer in volatile international environment, analysts said.
“The robust rebound means China is set to account for around one third of global growth in 2023 – giving a welcome lift to the world economy,” Kristalina Georgieva, Managing Director of the IMF, said at the China Development Forum in March.
The Global Times reported recently: “The robust rebound means China is set to account for around one third of global growth in 2023, giving a welcome lift to the world economy. And beyond the direct contribution to global growth, our analysis shows that a 1 percentage point increase in GDP growth in China leads to 0.3 percentage point increase in growth in other Asian economies, on average—a welcome boost.”
