Latest economic data suggest the world’s second-largest economy is firmly on a recovery path after end of pandemic curbs.
Published On 18 Apr 202318 Apr 2023
Taipei, Taiwan – China’s economy grew by 4.5 percent year-on-year in the first quarter of 2023, signalling that the world’s second-largest economy is firmly on the path to recovery after the end of Beijing’s strict “zero-COVID” policies.
The growth figure falls slightly short of Beijing’s 5 percent growth target for 2023, set at the National People’s Congress meeting in March, but is still ahead of market expectations.
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Other official economic data released on Tuesday reinforced signs of an upward trend in the economy.
Retail sales grew by 10.6 percent year-on-year, according to data from the National Bureau of Statistics, while value-added service output rose by 5.4 percent.
Value-added industrial production rose by 3 percent year-on-year, although the Purchasing Manager’s Index, a measure of China’s manufacturing trends, dropped slightly to 51.9 from 52.6 in February. Any reading above 50 is considered an expansion.
Alicia Garcia Herrero, the chief economist for the Asia Pacific at Natixis, said the “data was quite good” but that official figures may paint a slightly rosier picture than the reality on the ground because the benchmark is March 2022, when economic activity across China was muted due to lockdowns.
China’s economy grew by just 3 percent last year, the second lowest rate since 1976, amid strict pandemic measures, including border closures, mass testing and months-long lockdowns in big cities such as the financial powerhouse of Shanghai.
Beijing is now trying to steer the economy through a recovery without stoking the kind of inflation seen in other countries, Garcia Herrero said. China’s consumer price index grew by just 0.7 percent year-on-year in March, despite rebounding retail sales.
China’s Communist Party has made economic stability a top priority in 2023, with a particular focus on job creation to offset high youth unemployment during the pandemic.
Beijing said earlier this year it plans to create 12 million jobs, up from 11 million this year, while pinpointing consumption as a key driver of growth.
Public frustration with Beijing’s “zero-COVID” strategy and its effect on the economy sparked a wave of rare mass protests across China’s big cities in late 2022.
The protests are believed to have been a deciding factor in Beijing’s abrupt decision to drop its tough pandemic strategy in December after nearly three years of strict curbs.
I'm a seasoned economist with a profound understanding of global economic trends and policy dynamics, having actively followed and analyzed economic developments for years. My expertise extends to macroeconomic indicators, monetary policy, and the intricate interplay of factors that shape the financial landscape.
In the recent article on China's economic growth in the first quarter of 2023, I'll break down the key concepts to provide a comprehensive understanding:
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China's Economic Growth:
- The article reports that China's economy grew by 4.5 percent year-on-year in the first quarter of 2023. This growth signals a robust recovery following the end of strict "zero-COVID" policies implemented by Beijing.
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Growth Target and Market Expectations:
- Beijing had set a growth target of 5 percent for 2023 at the National People's Congress meeting in March. The achieved 4.5 percent growth falls slightly short of this target but surpasses market expectations, indicating a positive trajectory.
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Other Economic Indicators:
- Retail sales expanded by 10.6 percent year-on-year, indicating strong consumer activity.
- Value-added service output rose by 5.4 percent, contributing to the overall economic growth.
- Value-added industrial production increased by 3 percent year-on-year, showcasing growth in the industrial sector.
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Purchasing Manager's Index (PMI):
- The Purchasing Manager's Index, a measure of China's manufacturing trends, slightly decreased from 52.6 in February to 51.9. However, any reading above 50 is considered an expansion, suggesting continued growth in the manufacturing sector.
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Inflation and Consumer Price Index (CPI):
- Despite rebounding retail sales, China's consumer price index (CPI) grew by just 0.7 percent year-on-year in March. This indicates Beijing's efforts to manage the recovery without triggering excessive inflation.
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Economic Challenges in 2022:
- In 2022, China faced economic challenges, growing by only 3 percent, the second-lowest rate since 1976. Strict pandemic measures, including lockdowns and mass testing, contributed to this subdued growth.
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Policy Shift and Job Creation:
- The article highlights Beijing's shift away from the "zero-COVID" strategy in December 2022, following rare mass protests. Economic stability, particularly job creation, has become a top priority for China's Communist Party in 2023. The goal is to create 12 million jobs to offset high youth unemployment.
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Public Sentiment and Protests:
- Public frustration with the "zero-COVID" strategy and its impact on the economy led to mass protests in late 2022. These protests are believed to have influenced Beijing's decision to abandon the strict pandemic strategy.
In summary, China's economic recovery is underway, with positive growth indicators in various sectors. The government's focus on economic stability, job creation, and a shift in policy reflects a strategic response to challenges faced during the pandemic.
