China announced on Monday (18) that it had recorded 4.8% annualized economic growth in the first quarter in several cities including Shanghai, the country’s main business hub, despite Covid19 restrictions.
The increase in the first quarter outweighed the 4% growth recorded over the same period in 2021, China’s National Bureau of Statistics (ONE) said.
The 4.8% expansion in the first quarter beat analysts’ expectations for a 4.4% gain and accelerated from the fourth quarter’s 4.0% rate.
In relation to the previous 3 months, the increase was 1.3%.
Analysts say April data is likely to be worse as lockdowns in the Shanghai trade hub and elsewhere weigh on activity, prompting some to warn of recession risks.
The world’s second largest economy began to slow down in the second half of 2021 with the crisis in the real estate sector and the increase in cases of Covid19, leading to restrictions in several cities.
- China’s GDP grows 8.1% in 2021 but slows in the fourth quarter
- Shanghai records Covid deaths again, first since the recent outbreak of cases
Health restrictions in major cities across the country, including Shanghai and the tech hub of Shenzhen, also impacted retail and employment numbers.
However, the growth data does not fully reflect the impact of the lockdown in Shanghai, which has kept millions of people at home for several weeks.
This is increasing pressure on the authorities to meet the 5.5% growth target for 2022, a crucial year for President Xi Jinping, who aspires to stay in power for another five years.
“We must understand that amid the increasingly complicated and uncertain local and international scenario, economic development faces increasing difficulties and challenges,” Linghui said in a statement.
In addition to the increase in coronavirus cases, the sanctions against Russia over the invasion of Ukraine are also hitting the Chinese economy.
China has seen industrial production pick up this year and consumption has been boosted by the Lunar New Year holiday, but travel restrictions imposed by the pandemic in March have hurt the economy.
According to ONE, industrial production increased by 5% in March compared to January and February.
At the same time, retail sales fell by 3.5% in March, according to the Statistics Office, and urban unemployment rose to 5.8%.
“Activity in March suggests the Chinese economy has been slowing, particularly domestic consumption,” said Tommy Wu, chief China economist at Oxford Economics.
The Chinese government is trying to strike a balance between “minimizing the disruption (of the economy) and containing the new wave of Covid19 contagions,” Wu added, before warning that the pressure on the economy could last until May or May could last even longer. Time.
Last week, automakers including XPeng and Volkswagen warned of serious supply chain disruptions and a possible shutdown of production if lockdowns continue in Shanghai, a metropolis of 25 million people.
Shanghai’s container port, the busiest in the world, is experiencing a backlog of goods, prompting shipping group Maersk to announce the suspension of reefer container shipments to the city.
“Further implications of the lockdown are imminent,” warned Iris Pang, chief economist for China at ING.
Pang said other cities may try to replicate the success of Shenzhen, which quickly resumed operations by taking strict measures with few Covid19 patients.
Shenzhen, a tech powerhouse in the south of the country, remained under lockdown for a week following a Covid19 outbreak in March but soon lifted restrictions.
Shanghai on Monday recorded its first three deaths from Covid19 since confinement began in March. The city recorded 22,000 new coronavirus cases in 24 hours.
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