China’s economy grows 4.8% in first quarter as virus bites
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Beijing (AFP) – China’s economy grew 4.8% in the first quarter, the National Bureau of Statistics said on Monday, warning of “significant challenges” ahead as a resurgence of the coronavirus threatens Beijing’s ambitious annual target .
The world’s second-largest economy was already losing momentum in the second half of last year with a property crisis and crackdowns.
But Beijing’s relentless approach to outbreaks in several cities this year has clogged supply chains and locked down tens of millions of people – including in the economic powerhouses of Shanghai and Shenzhen as well as the grain basket of the northeast of Jilin.
China’s gross domestic product growth was 4.8 percent year-on-year in the first quarter, the NBS said Monday, a figure that beat analysts’ expectations and was up 4.0 percent in the past. month of 2021.
But the data doesn’t fully account for the devastating impact of the lockdown in Shanghai, which has left millions stuck at home for several weeks.
Virus restrictions hitting key cities in March also weighed on retail sales, pushing up the unemployment rate.
This raises the bar for officials to meet the country’s full-year growth target of around 5.5%, in a pivotal political period for President Xi Jinping who is eyeing another term in office at the Party Congress that will be held later this year.
“With the domestic and international environment becoming increasingly complicated and uncertain, economic development is facing significant difficulties and challenges,” NBS spokesperson Fu Linghui said Monday.
While China saw an uptick in manufacturing growth earlier this year – with a boost in the spending arm during the Lunar New Year holiday – restrictions on movement hit several parts of the country in March, disrupting businesses and keeping consumers at home.
Industrial production growth slowed to 5.0% in March, NBS data showed, down from the January-February period.
Meanwhile, retail sales fell 3.5% and the urban unemployment rate climbed to 5.8% last month.
“March activity data suggests that the Chinese economy has slowed, particularly household consumption,” Tommy Wu, chief China economist at Oxford Economics, said in a note.
China’s central government is trying to strike a balance between “minimizing disruption and controlling the latest wave of Covid infections”, he added, but warned of a slowdown in economic activity in May, if not more.
Last week, automakers including XPeng and Volkswagen warned of serious disruptions to supply chains and possibly even a complete halt to production if the lockdown of Shanghai’s 25 million people persists.
Major cities affected by Covid outbreaks include the southern tech powerhouse of Shenzhen, which was completely locked down for almost a week in March, although it has since been reopened.
On Monday, Shanghai reported its first Covid deaths since its lockdown began – all elderly patients – in addition to more than 22,000 new positive cases.
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