Powerhouses post slower Q1 GDP growth
▶ Economists call for more aggressive policies amid downward pressure
A new round of COVID- 19 flare- ups continues to add pressure to the Chinese economy, with two major economic powerhouses – Shanghai and South China’s Guangdong Province – recording GDP growth rates below the national level of 4.8 percent during the first quarter of 2022 due to interruptions caused by lockdowns, while northern and inland provinces’ economies surged ahead on the back of stable investment and consumption.
The disparity in local GDP growth reflects mounting economic pressure from demand contraction, supply shocks and weakening expectations amid multiple COVID- 19 resurgences and a complicated and grim external environment, economists said, as they called for more aggressive macro- economic policies, including cash handouts, to stabilize growth.
During the first quarter, Guangdong’s GDP reached 2.85 trillion yuan ($ 438 billion), up 3.3 percent year- on- year, 1.5 percentage points lower than the national average of 4.8 percent growth, according to data released by local government.
Meanwhile, Shanghai, which has been shocked by an abrupt spike in cases starting in March, reported GDP growth of 3.1 percent to 1 trillion yuan.
Growing external uncertainties brought about by the Russia- Ukraine conflict, and COVID- 19 resurgences in Shanghai and Guangdong further dampened consumers’ expectations, disrupted industry and supply chains, and affected local imports and exports, said Mao Yanhua, dean of the Institute of Regional Openness and Cooperation of Sun Yat- sen University.
“Some export- oriented manufacturers in coastal areas are reluctant to accept foreign orders, as profits are severely squeezed due to inflated international bulk commodity prices and shipping costs,” he said, adding intra- provincial logistics bottlenecks in some areas also affected manufacturing.
By contrast, many provinces in middle and western areas such as Central China’s Hubei and Hunan provinces led national growth with GDP growth rates all above 6 percent.
Cao Heping, an economist from Peking University, told the Global Times on Sunday that middle and western cities that are empowered by the digital economy, for example Wuhan in Hubei and Xi’an in Northwest China’s Shaanxi Province, will continue to record sound performances for the rest of the year.
However, one of the problems faced by the economy as a whole is weakening expectations, as the short- term impact of the COVID- 19 has become a long- term one, Cao said, noting the recovery of consumers’ expectations will need three to five years.
Cong Yi, professor of the Tianjin University of Finance and Economics, said that accelerating the establishment of a unified domestic market will be of crucial importance for China’s economy to offset the shock of the pandemic, as it will help smooth the running of elements and give full play to the advantage of the super large domestic market to boost “dual circulation.”