While China’s growth has been carefully observed over the past few decades, it has been especially placed under the spotlight since the outbreak of the Covid-19 virus in 2020. Following the lifting of pandemic restrictions, the Chinese economy has made a strong start in the 1st quarter, with its GDP expanding by 4.5% year-on-year. This marks the highest growth since the 1st quarter of last year and has exceeded the predictions of many economists.
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Strong Rebound Over Q1
The 4.5% growth, as reported by the National Bureau of Statistics, represents a major increase from the 2.9% growth seen in the final quarter of 2022. This has created a strong sense of renewed optimism, especially since the economy fell short of the 5.5% target set for the previous year.
Employment Remained Stable, With Slight Decrease in Unemployment
China’s job market remained stable over the first quarter, with the surveyed unemployment rate experiencing a slight decrease in March (0.3% lower than the previous month). Overall, the urban unemployment rate surveyed was 5.5%, which is 0.1% lower than Q4 of 2022.
Imports and Exports: Exports Experience Major Increase
The total value of imports and exports increased by 4.8% year-on-year. While the value of imports is up only by 0.2%, a major increase was seen in exports, which rose by 8.4%. The increase in exports came unexpectedly, given the decline in demand from the United States and Europe. Despite a slow start in January and February, export demand soared by 14.8% in March, keeping China on track to achieve its growth target for 2023.
Purchasing Managers Index (PMI) Experiences a Marginal Decrease, Signalling Slight Contraction
The composite PMI output index for large enterprises is a weighted summation of the manufacturing output index and non-manufacturing business activity index. If the PMI index is 50, this indicates no change, whereas a number over 50 indicates improvement and a number below 50 suggests a decline.
The economy showed signs of a strong rebound, with manufacturing boasting its largest improvement in the last decade. According to the National Bureau of Statistics, China’s non-manufacturing PMI soared to 58.2, marking the highest level since 2011. The manufacturing PMI, which was at 51.9, was a slight decrease from 52.6 in February, but this is still a significant increase from the level of 47.0 seen in December.
Value of Industrial Enterprises Sees Growth
The value of industrial enterprises, also referred to as the industrial growth rate, saw a 3% expansion over the same period last year, which is 0.3% higher than the final quarter of 2022.
Retail Sales Up in Q1
Total retail sales of consumer goods increased by 5.8% year-on-year in the 1st quarter. The increase can mostly be attributed to retail sales in March, which saw a 10.8% increase from the previous year. Online retail sales remained strong, with an 8.6% increase in the 1st quarter.
Positive Signs Looking Forward
There are many positive signs looking forward, such as the services sector’s rebound, which experienced a 5.4% increase (year-on-year) as China’s economic recovery gains traction. However, even though banks and experts are readjusting their outlook for the year ahead, the challenges facing the global economy point to an overall slowdown in the latter parts of the year.
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