China’s economy grew by just 3 percent over the past year.
Beijing, China:
China is expected to herald an economic recovery on Tuesday when Beijing releases its first quarterly GDP figures since growth-impeding Covid restrictions were lifted late last year.
The Asian giant’s virus containment policy — a relentless regime of strict quarantines, mass testing and travel restrictions — severely curtailed normal economic activity before abruptly halting in December.
Tuesday’s releases will provide the first snapshot since 2019 of a Chinese economy unburdened by public health restrictions, with analysts polled by AFP expecting average year-on-year growth of 3.8 percent in the January-March period.
But the world’s second-largest economy continues to be plagued by a host of other crises, from a heavily indebted real estate sector to dwindling consumer confidence, global inflation and the threat of recession elsewhere.
“The recovery is real, but still in its early stages,” said Larry Hu, chief China economist at investment bank Macquarie.
Any recovery “will be gradual, largely due to weak consumer confidence,” which in turn makes businesses “reluctant” to hire more staff, he said.
China’s economy grew just 3 percent for all of last year, one of its weakest performances in decades.
It posted 4.8 percent growth in the first quarter of 2022, although growth slowed to just 2.9 percent in the last three months of the year.
property risks
A creeping crisis in the real estate sector – which together with construction accounts for about a quarter of China’s GDP – continues to pose “challenges to economic growth,” Rabobank analyst Teeuwe Mevissen said.
Real estate has been a major factor in China’s recovery from the first wave of the pandemic in 2020, when Beijing managed to halt the widespread spread of the coronavirus.
But weak demand has since plagued a sector already plagued by falling house prices and crippling debt that is leaving some developers struggling to survive.
The situation appears to have eased slightly in recent weeks as official support helped stabilize prices in March, according to figures released by the National Bureau of Statistics on Saturday.
Economists will also closely monitor March retail sales, the main indicator of household consumption, on Tuesday.
According to official figures, retail sales finally picked up in January and February after four straight months of contraction.
However, nearly 60 percent of urban households still prioritize saving over investing or spending, up from 45 percent before the pandemic, according to a survey by China’s central bank.
Consumer confidence “remains well in negative territory” despite the encouraging removal of Beijing’s Covid curbs, said Harry Murphy Cruise, a macroeconomist who focuses on Asia-Pacific at ratings agency Moody’s.
“Households have long memories and will take time to forget the economic pain of recent years,” he told AFP.
Global Tensions
Beijing has set a comparatively modest growth target of around 5 percent for this year, a goal that the country’s Premier Li Qiang has warned could be difficult to achieve.
While many pundits tend to take China’s official figures with a grain of salt, most expect Beijing to reach that mark.
A survey by AFP analysts forecast that the Chinese economy will grow by an average of 5.3 percent this year.
That roughly corresponds to the International Monetary Fund’s forecast of 5.2 percent.
Still, analysts warned that broader global trends could still weigh on China’s recovery.
These include geopolitical tensions with the United States, the threat of recession in other major economies, and runaway global inflation.
(This story was not edited by NDTV staff and is auto-generated from a syndicated feed.)
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