Chinese economy shows good first 2 months

PLEASANT START A woman in traditional dress walks through a sakura garden in Beijing on Saturday March 19, 2022. PHOTO AFP

BEIJING: China’s economy far exceeded market expectations, firing at full steam in the first two months as capital investment picked up and retail sales rebounded.

The strong start sent an optimistic note for the world’s second-largest economy to grow more than 5% in the first quarter, despite downward pressure from rising commodity prices and Covid-19 outbreaks, the report said. analysts said.

The better-than-expected start also offered a resounding rebuttal to what appears to be a concerted campaign by Western media and financial institutions to denigrate and destabilize the Chinese economy.

With an extensive policy toolkit and strong fundamentals, analysts have expressed confidence in the country’s achievement of its GDP growth target of around 5.5% this year.

From January to February, China’s industrial production rose 7.5 percent year on year, from 4.3 percent in December, according to data released by the National Bureau of Statistics (NBS) on Tuesday. The growth rate was the fastest since July 2021.

Retail sales rose 6.7% year-on-year, accelerating 5 percentage points from December, while fixed asset investment rose 12.2% year-on-year, also the highest level since July.

“As China enters its third year of battling the coronavirus, such economic growth is unprecedented. In the first two months of last year, China recorded tremendous growth mainly due to a weak base effect and ‘restorative growth.’ But this year, the rapid expansion, which dampened the base effect, embodied the strength and quality of the Chinese economy,” Tian Yun said on Tuesday. vice director of the Beijing Economic Operations Association, to the Global Times.

It has been rare in recent years for exports and fixed asset investment to show double-digit growth, which has further boosted optimism about the economy, Tian said.

Analysts noted that the rise in fixed asset investment was the result of policy moves to anticipate planned infrastructure investment and issue special purpose bonds. In addition, the impact of the “stay put” policy for the seven-day Spring Festival holiday was “moderate” compared to the past two years, although it still weighed on sectors such as as culture and tourism, transport, catering and retail trade.

Fu Linghui, spokesperson for the SNB, said at a press briefing on Tuesday that the momentum of the January-February recovery remains relatively good, while acknowledging that the external environment is still complicated and severe, and that the Chinese economy still faces many risks and challenges. .

“Coronavirus outbreaks in some regions will affect local economic recovery, but the overall epidemic prevention and control situation is stable, and the Chinese economy has also maintained stable operations,” Fu said, adding that the uncertainties hovering over the epidemic, it will take time to observe its impact.

China has accumulated vast experience in controlling the epidemic, and the measures in place will effectively curb the spread of the virus, so the impact on the economy will also be gradually controlled, Fu said.

Liu Xuezhi, a senior macroeconomics expert at the Bank of Communications, predicted that GDP will grow more than 5% in the first quarter, given the strong start.

“The impact of the epidemic on the economy will weaken after the second quarter, and the quarterly GDP growth rate may climb throughout the year,” Liu told the Global Times on Tuesday.

Tian said 5% could be the “floor GDP growth rate” in the first quarter. “If the coronavirus outbreaks don’t weigh heavily on consumption and supply chains, GDP growth could even rebound to 6%.”

But the downward pressure remains, and Fu also warned of “imported” inflationary pressure on the economy.

“The direct impact of Russian-Ukrainian tensions on the Chinese economy is limited because the two nations account for a relatively small share of Chinese trade. But geopolitics has pushed up global bulk commodity prices, which will put pressure on imported inflation,” Fu said. adding that China has “favorable conditions” to stabilize domestic energy supply.

On Monday, while presiding over an executive meeting of the State Council, cabinet Premier Li Keqiang stressed the importance of efforts to overcome difficulties to ensure stable economic growth.

China has set its GDP growth target of around 5.5% in 2022, projecting policymakers’ confidence in the resilience of the world’s second-largest economy even as they warned of “much more risk and challenges” this year.

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