China’s economy gathers speed, global risks raise challenges to outlook
China’s rebound has so far remained uneven as its investment-fuelled growth of the past to one now reliant on consumption faces challenges.
BEIJING - China’s economy grew at a faster-than-expected pace in the first quarter, as the end of strict Covid curbs lifted businesses and consumers out of crippling pandemic disruptions, although headwinds from a global slowdown point to a bumpy ride ahead.
More than a year-long sweeping streak of global monetary policy tightening to rein in red-hot inflation has dented world economic growth, leaving many countries including China reliant on domestic demand to spur momentum and raising the challenge for policymakers looking for postCovid stability.
Gross domestic product grew 4.5 percent year-on-year in the first three months of the year, data from the National Bureau of Statistics (NBS) showed on Tuesday, faster than the 2.9 percent in the previous quarter. It beat analyst forecasts for a 4.0 percent expansion and marked the strongest growth in a year.
Investors have been closely watching first quarter data to assess the strength of the recovery after Beijing abruptly lifted Covid curbs in December and eased a three-year crackdown on tech firms and property. GDP growth last year slumped to one of its worst in nearly half a century due to Covid restrictions.
“Economic recovery is well on track. The bright spot is consumption, which is strengthening as household confidence improves,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “The strong export growth in March also likely helped to boost GDP growth in Q1.”
Chinese policymakers have pledged to step up support for the $18 trillion economy to keep a lid on unemployment, but they face limited room to manoeuvre as businesses grapple with debt risks, structural woes and global recession worries.
China’s rebound has so far remained uneven as its investment-fuelled growth of the past to one now reliant on consumption faces challenges.
Consumption, services and infrastructure spending have perked up but factory output has lagged amid weak global growth, while slowing prices and surging bank savings are raising doubts about demand.
China’s exports unexpectedly surged in March, but analysts cautioned the improvement partly reflects suppliers catching up with unfulfilled orders after the Covid-19 disruptions.
NBS spokesman Fu Linghui told a news conference that while it was a good start for the economy, “the international environment is still complex and ever-changing, constraints from insufficient domestic demand are obvious and the foundation for economic recovery is not solid.”