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China’s Economic Growth Accelerates With Consumption Boost

China’s Economic Growth Accelerates With Consumption Boost

According to China’s National Bureau of Statistics, China’s economy grew 4.5 percent in the first quarter. The accelerated growth marked the fastest pace in a year and relieved Nike, Adidas, VF Corp., and several industry-leading vendors with heavy exposure in the world’s second-largest economy.

The growth was the highest since last year’s first quarter when China’s economy grew by 4.8 percent, better than the 4 percent forecast in a Reuters poll. The economy expanded by 2.9 percent in Q422.

GDP topped $4.15 trillion in the January-to-March period and was 2.2 percent higher than in the fourth quarter of 2022, with heavy industry, agriculture and manufacturing making the most significant contributions after services, according to the agency’s preliminary estimates.

China’s growth was spotlighted following the country’s reopening after ending strict COVID restrictions in place for nearly three years.

Reuters said the government had achieved its goal of a “smooth transition” from its COVID prevention and controls imperative to a new stable growth phase in a relatively short time.

The economy grew by 3 percent in 2022, short of Beijing’s official target of around 5.5 percent in March last year.

In the first quarter, consumption posted the strongest rebound. Retail sales jumped 10.6 percent in March from a year earlier, the highest level of growth since June 2021. In the January to March months, retail sales grew 5.8 percent, mainly lifted by a surge in revenue from the catering service industry.

Industrial production also showed a steady increase, up 3.9 percent in March, compared with 2.4 percent in January-to-February. (China usually combines its economic data for January and February to account for the impact of the Lunar New Year holiday.)

Still, authorities cautioned that China would likely face import and export pressures in the coming months amid an uncertain international economic environment and also warned of inadequate domestic market demand. 

Other economic indicators with weaker growth, such as industrial output and fixed-asset investments, indicate an uneven recovery. Slowing price indices also point toward inadequate demand.

Private investment also barely budged, and youth unemployment surged to the second highest level on record, indicating the country’s private sector employers are still wary about longer-term prospects.