Amid the rapidly rising consumer spending spree post the termination of three years of stringent pandemic restrictions, China’s economy got off to a strong start in 2023.
As per the National Bureau of Statistics, the gross domestic product (GDP) surged by 4.5% during Q1 from a year ago. Reportedly, this beat the 4% growth estimate from a Reuters poll of economists.
However, the number of private investments barely budged, and the rate of youth unemployment increased to the second highest level on record. This indicated the misinterprets of the longer term prospects among the country’s private sector employers.
On the other side, the retail sales plunged 10.6% in March from 2022, depicting the highest level of growth since June 2021. The retail sales, in the January to March months, surged 5.8%, mainly due to the revenue from the catering service sector.
Furthermore, industrial production showed a steady increase as it jumped 3.9% in March as opposed to 2.4% in the January-to-February period.
In 2022, on account of Beijing’s approach to stamp out the COVID-19 led havoc on supply chains and hindered consumer spending, the GDP significantly missed the official growth target of nearly 5.5% by expanding to merely 3%.
With the economic recovery gaining traction, several international organizations and investment banks have upgraded the growth forecasts in China for this year. The International Monetary Fund stated in the last week released World Economic Outlook that China is strongly rebounding following the reopening of its economy.
It predicted that China’s GDP will grow 5.2% in 2023 and 5.1% in 2024.
However, several analysts believe that the backloading of economic activity in Q4 of 2022, propelled by the pandemic restrictions and subsequent chaotic reopening have led to the reported strong growth in Q1.
It has been revealed that the Chinese government resorted to surprising measures for restoring the confidence amongst private entrepreneurs. However, the campaigns have inspired more nervousness than optimism.