China’s new GDP figures may restore faith in its economy
After recent encouraging figures, doubts about this year’s recovery should, happily, go into recession.
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Since China abandoned its zero-covid regime at the end of last year, its economic recovery has been both hotly anticipated and closely scrutinised by investors. Sceptics had begun to wonder if demoralised consumers would open their wallets, if faith in a broken property market could be restored, and if a global downswing would undermine China’s upward momentum.
Official figures released on April 18th should help allay some of that scepticism. China’s GDP grew by 4.5% in the first three months of this year, compared with the same period in 2022. That does not sound particularly impressive by China’s standards. But to get there, the economy first had to climb out of the hole created by the ruinous lockdowns in Shanghai and elsewhere last spring (see chart). Much of China’s growth over the past 12 months was concentrated in the last three, during which it expanded at an annualised pace of about 9%.
More detailed, monthly figures clarified the shape of the recovery. Retail sales grew by double-digits year-on-year in March, before adjusting for inflation. Catering, which was hard hit by pandemic-era restrictions, grew by over 26%. Exports held up better than expected, at least for now. Property sales were strong in China’s big cities, but not elsewhere, suggesting that China’s national housing slump is becoming a more local malaise. China still has deep economic problems to overcome, including rising youth unemployment and mounting provincial debt. But after these encouraging figures, doubts about this year’s recovery should, happily, go into recession.
© 2023, The Economist Newspaper Limited. All rights reserved. From The Economist, published under licence. The original content can be found on www.economist.com
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