BEIJING (XINHUA) – Newly released data indicated that the Chinese economy is recovering with stronger-than-expected momentum, kicking off the year with a good start and boosting confidence in a tepid global economic recovery.
Data from the National Bureau of Statistics showed recently that China’s gross domestic product (GDP) grew 4.5 per cent year on year in the first quarter, beating the consensus forecast and marking the highest growth in a year.
China’s robust rebound – according to economists and observers – is crucial to a sluggish global economic recovery amid still-elevated inflation and higher interest rates, as roughly 90 per cent of advanced economies are projected to see a decline in their growth rate this year.
FASTER-THAN-EXPECTED GROWTH
The 4.5-per-cent growth in the first quarter, much faster than the 2.9-per-cent increase in the fourth quarter of last year, came as the country secured a smooth transition in its COVID-19 prevention and control measures.
“Efforts to propel China out of its pandemic-induced lethargy are paying off, as the lifting of lockdown restrictions and big stimulus packages propel growth higher than expected,” said head of money and markets Susannah Streeter at Hargreaves Lansdown, a British financial service company.
“As consumer confidence has grown and production has got back on track, retail sales have jumped to a two-year high and industrial output has picked up a pace not seen for five months,” Streeter said, noting that the first quarter’s growth beats expectations of a four-per-cent uplift.
Retail sales of consumer goods, for example, went up 5.8 per cent year-on-year in the first quarter, reversing a decline of 2.7 per cent in the last quarter of 2022, according to Tuesday’s data. The value-added industrial output increased by three per cent year-on -ear in the first three months, with a 3.9-per-cent accelerated expansion in March.
The faster-than-expected growth in the first quarter is just “warming up”, prominent Croatian Economist and Former Economy Minister Ljubo Jurcic told Xinhua in a recent interview. “This is a good signal of even higher growth in the future.”
The Croatian economist’s view is echoed by many, including China lead economist Louise Loo at British think tank Oxford Economics.
“The combination of a steady uptick in consumer confidence as well as the still-incomplete release of pent-up demand suggests to us that the consumer-led recovery still has room to run,” Loo said.
“The very healthy print at this early stage will provide the space for authorities to rely on organic growth and for a very gradual policy normalisation this year,” Loo added.
The International Monetary Fund (IMF) last week projected a 5.2-per-cent growth for China in 2023, up from three per cent last year. The World Bank, meanwhile, expects China’s GDP growth to rebound to 5.1 per cent in 2023. Both are in line with China’s official growth target of around five per cent.
BRIGHT SPOT OF GLOBAL ECONOMY
With its vast economic volume and deep integration into the global economy, China’s stronger-than-expected rebound is widely expected to promote growth in the Asian region and beyond, boosting confidence in global economic recovery.
Against the backdrop of slowing growth of other major economies, China’s outstanding economic performance will help promote regional economic development in this context, World Bank East Asia and Pacific Chief Economist Aaditya Mattoo told Xinhua in a recent interview.
According to the World Bank’s latest East Asia and the Pacific Economic Update report, economic performance across the region – while robust – could be held back this year by slowing global growth, elevated commodity prices and tightening financial conditions due to persistent inflation.
The Washington-based multilateral lender expected growth in East Asia and the Pacific region to accelerate to 5.1 per cent in 2023 from 3.5 per cent in 2022, saying that “the higher growth is mostly due to China”.
The positive spillover effects go far beyond.
Assistant governor of the Bank of Thailand Piti Disyatat believes that the Chinese economy – bouncing back from the COVID-19 shocks – is a stabiliser and driving force for the regional and global economies.
“The world economy is going through a high inflation period and a growth slowdown. China has managed to keep inflation quite low while its growth is bouncing back quite rapidly. That’s a stabilising force, beneficial for both the region and global economy,” he said.
Given the size of the economy, China – with its strong rebound – would be a “key contributor” to global growth in the coming year, IMF Chief Economist Pierre-Olivier Gourinchas said at a press briefing during the IMF and World Bank Spring Meetings last week.
The IMF projects global growth to remain around three per cent over the next five years, the lowest medium-term growth forecast since 1990 and well below the average of 3.8 per cent from the past two decades. The multilateral institution also sees economic activity in the United States and the Euro Area slowing, where higher interest rates weigh on demand.
IMF Managing Director Kristalina Georgieva said early this month that as many face a steeper climb, some momentum comes from emerging economies, noting that India and China are expected to account for half of the global growth in 2023.
Asia – China in particular – is the bright spot of the world economy, Daniel Leigh, who heads the World Economic Studies division in the IMF’s Research Department, told Xinhua in a recent interview, expressing confidence that the Chinese government is in a better position to navigate its economy through international challenges.
“So this is going to provide a boost to a lot of countries,” said Leigh. “This is a very positive development” that definitely has positive spillover effects, he said.
For some other developing countries, China’s economic growth could benefit them from a long-term perspective.
“The fact that an economy in the size of China is growing at five to six per cent is absolutely significant,” said director of the Centre for Studies and Scientific Research Manuel Jose Alves da Rocha at the Catholic University of Angola, noting that research on the Chinese economy should focus on the dynamics of development. “I think that the Chinese experience is rich in lessons, and African countries, particularly Angola, should carefully study the Chinese experience,” he said.
