Growth recovery in China despite “significant challenges”

China on Monday announced a rebound in its first-quarter economic growth (+4.8% over one year), despite restrictions in Shanghai and several regions severely weighing on economic activity.

• Also read: First COVID-19 deaths in Shanghai since lockdown began

The Chinese economy faces “significant challenges,” a senior economy official admitted during a news conference.

While caution is warranted, China’s official GDP number is still under scrutiny given the country’s weight in the global economy.

This increase was generally expected. However, a group of analysts polled by AFP expected a more moderate recovery (4.3%).

In the fourth quarter of 2021, the country’s gross domestic product (GDP) had grown by 4% year-on-year.

China’s economy is facing “multiple difficulties associated with an increasingly difficult and complex global situation and frequent epidemic rebounds,” noted National Bureau of Statistics (BNS) official Fu Linghui.

Quarter-on-quarter, the Asian giant’s growth is up just 1.3%, a slower rate than the October-December period (1.6%).

China, which had largely brought the COVID-19 epidemic under control on its soil for two years, has been facing the worst outbreak of the entire pandemic since last month.

Tens of millions of Chinese were imprisoned in the technology metropolis Shenzhen (south) in March and are still sitting in the north-east of the country, the cradle of the automobile industry, as well as in the economic metropolis Shanghai.

Unlike many countries that choose to coexist with the virus and lift restrictions, China continues to pursue a zero-COVID policy.

These measures significantly affect transport and supply chains and have brought many companies to a standstill.

These difficulties came on top of those already weighing on the Chinese economy in recent months: sluggish consumption, tighter regulations in several sectors such as real estate and technology, and uncertainties surrounding the war in Ukraine.

In March, retail sales, the key indicator of household spending, fell 3.5% on a year after an unexpected acceleration from January-February together (6.7%), the only data released at the time.

For its part, industrial production fell to 5% over the year last month, down from 7.5% in the first two months of the year.

The unemployment rate rose to 5.8% in the first two months of the year from 5.5% in January and February.

Specially monitored by the authorities and calculated only for city dwellers, the unemployment rate had reached an all-time high of 6.2% in February 2020, at the height of the epidemic, before falling.

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