BEIJING (AFP) – China is expected to announce an economic rebound tomorrow, when Beijing releases its first quarterly gross domestic produce (GDP) figures since abolishing growth-sapping COVID-19 restrictions late last year.
The Asian giant’s virus containment policy – strict quarantines, mass testing and travel curbs – strongly constrained normal economic activity before it was ended in December.
The disclosures tomorrow will give the first snapshot since 2019 of a Chinese economy unencumbered by public health restrictions, with analysts polled by AFP expecting an average of 3.8 per cent year-on-year growth in the period from January through March.
But the world’s number two economy remains beset by a series of other crises, from a debt-laden property sector to flagging consumer confidence, global inflation and the threat of recession elsewhere.
“The recovery is real, but still in its early stage,” said chief China economist at the investment bank Macquarie Larry Hu. Any rebound “will be gradual, largely due to the weak confidence” of consumers, which in turn makes companies “reluctant” to hire more staff, he said.
China’s economy grew by just three per cent in the whole of last year, one of its weakest performances in decades.
It posted a 4.8 per cent expansion in the first quarter of 2022, though growth pulled back to just 2.9 per cent in the final three months of the year. A crisis in the property sector – which together with construction accounts for around a quarter of China’s GDP – continues to “pose challenges to economic growth”, said Rabobank analyst Teeuwe Mevissen.
PROPERTY PERILS
Real estate was a key driver of China’s recovery from the initial wave of the pandemic in 2020.
But weak demand has since plagued a sector already afflicted by falling home prices and crippling debts that have left some developers struggling to survive.
The situation appears to have eased slightly in recent weeks as official support helped prices stabilise in March, according to figures released on Saturday by the National Bureau of Statistics.
Economists will also be watching keenly tomorrow for March’s retail data, the main indicator of household consumption. Retail sales finally ticked up in January and February following four successive months of contraction, according to official figures.
But nearly 60 per cent of urban households still prioritise saving money over investing or spending it, up from 45 per cent before the pandemic, according to a survey by China’s central bank.
GLOBAL TENSIONS
Beijing has set a comparatively modest growth target of around five per cent this year, a goal the country’s Premier Li Qiang has warned could be hard to achieve.
An AFP analysts’ poll predicted that the Chinese economy would grow by an average of 5.3 per cent this year. That is roughly in line with the International Monetary Fund’s forecast of 5.2 per cent.
