China’s economy beat expectations and grew by 4.8 per cent in the first quarter of 2022 compared with a year earlier, the National Bureau of Statistics (NBS) announced on Monday.

The median survey of Bloomberg analysts had predicted 4.3 per cent growth between January and March, and up from 4 per cent growth in the fourth quarter of last year.

China has set its gross domestic product (GDP) growth target for 2022 at “around 5.5 per cent”.

“We must be aware that with the domestic and international environment is becoming increasingly complicated and uncertain, and that the economic development is facing significant difficulties and challenges,” said NBS spokesman Fu Linghui.

In other figures released by the NBS on Monday, industrial production, a gauge of activity in the manufacturing, mining and utilities sectors, grew by 5 per cent in March from a year earlier, down from 7.5 per cent growth in combined figures for January and February.

This was above the forecast in the Bloomberg survey of analysts, which had predicted 4 per cent growth in March.

Retail sales fell by 3.5 per cent in March, year on year, down from 6.8 per cent growth in combined figures for January and February.

This was below the forecast in the Bloomberg survey of analysts, which had predicted a fall of 3 per cent.

Fixed-asset investment – a gauge of expenditure on items including infrastructure, property, machinery and equipment – rose by 9.3 per cent in the first three months of the year, compared with a year earlier.

This was above the forecast in the Bloomberg survey of analysts, which had predicted 8.4 per cent growth.

The surveyed jobless rate, an imperfect measurement of unemployment in China that does not include figures for the nation’s tens of millions of migrant workers, stood at 5.8 per cent in March from 5.5 per cent in February.

The target for the surveyed urban unemployment rate this year has been set at “within 5.5 per cent”, compared with the 5.1 per cent reported for last year.

The first quarter GDP growth is strong. But China’s economy slowed sharply in March due to the Covid outbreaks in many cities.

The unemployment rate for those aged 16 to 24 rose to 16 per cent in March, up from 15.3 per cent in combined figures for January and February.

Beijing has also set a target of creating more than 11 million new urban jobs this year, having added 12.69 million last year.

In the first three months of year, China said it had created 2.85 million new urban jobs.

“The first quarter GDP growth is strong. But China’s economy slowed sharply in March due to the Covid outbreaks in many cities. Consumption took a hit with retail sales growth turned negative,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

The Asian Development Bank said earlier this month that China’s economy will still grow by 5 per cent in 2022 having opted to not revise down its forecast despite the ongoing coronavirus disruptions.

The World Bank cut its growth forecasts for China’s economy to 5 per cent this year, down from a previous estimate of 5.4 per cent.

Last week, Premier Li Keqiang raised a “sense of urgency” just days after flagging worse-than-expected economic headwinds and greater uncertainties.

Only four days earlier he had similarly flagged worse-than-expected economic headwinds and greater uncertainties.

China’s central bank on Friday also announced a much-anticipated cut of its reserve requirement ratio, or the amount of cash that banks must hold in reserve, to shore up its slowing economy amid growing headwinds.

“China’s 4.8 per cent GDP growth in the first quarter of 2022 beats our expectation. We think it mainly reflects the growth seen in the official January-February data before the weakening in economic activities in March,” said Tommy Wu, lead China economist at Oxford Economics.

“March activity data suggests that China’s economy slowed, especially in household consumption, amid the lockdowns in Shenzhen and Shanghai as well as mobility restrictions imposed in various parts of China.

“We expect a stronger macro policy response in the second quarter to shore up growth, but the impact will be limited in the context of restricted mobility. The effectiveness of policy stimulus will depend on whether mobility will still be restricted in a broad scale, so risks to the outlook remain skewed to the downside.”
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