China GDP: economy grew, but ‘more pain will come’ as coronavirus, lockdown pressures weigh on outlook

China’s economy grew by 4.8 per cent in the first quarter of 2022 compared with a year earlier, up from the 4 per cent growth seen in the fourth quarter of last year

Retail sales fell by 3.5 per cent in March from a year earlier, while industrial production grew by 5 per cent last month and the surveyed jobless rate rose to 5.8 per cent

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

Published: 12:00am, 19 Apr 2022Updated: 11:38am, 19 Apr 2022

China’s first quarter growth beat expectations, but weaknesses have been highlighted by the ongoing coronavirus wave hanging over the economy, with questions being asked if Beijing will take further action to guard against multiple headwinds.

Gross domestic product (GDP) growth of 4.8 per cent in the first three months of 2022 compared with a year earlier, which was confirmed on Monday, was higher than the 4 per cent expansion registered in the previous quarter and is in stark contrast to the start of 2020, when China’s economy shrank by 6.8 per cent.

But in the first three months of this year, consumption, exports and investment are all losing steam and businesses and residents in Shanghai, which has been under a de facto lockdown since the end of March, are demanding action.

Many other Chinese cities are also feeling the strain of China’s “dynamic zero-Covid strategy”, and analysts have pointed to a convergence of downward pressure, which also includes a rising jobless rate, growing capital outflows and the emergence of higher producer and consumer prices.

GDP in the first quarter does not fully reflect lockdown impacts. More pain will come in the second quarter

Iris Pang

“GDP in the first quarter does not fully reflect lockdown impacts,” said Iris Pang, chief Greater China economist at ING Bank. “More pain will come in the second quarter.”

Retail sales fell by 3.5 per cent in March, year on year, compared to 6.7 per cent growth in combined figures for January and February.

Revenues for the contact-intensive catering sector dropped by 16.4 per cent last month, while car sales plunged by 7.5 per cent, garments sales by 12.7 per cent and jewellery sales by 17.9 per cent.