And China’s gross domestic product recorded in the first quarter of 2023, growth of 4.5% over the previous year, which means that China is looking to recover and stimulate growth, which is the opposite of what the governments of the world’s major economies are doing by focusing on fighting inflation, which has stakeholders and pundits wondering if this recovery is good enough to meet investor expectations?
Economists believe that the Chinese government’s interest is currently focused on economic growth, due to the repercussions of the severe restrictions caused by the Corona pandemic and the heavy burden it has placed on economic activity, especially after the adoption of the “Zero Covid” policy, which has lost the reliability of the world’s second largest economy with its trading partners due to supply chain disruptions.
According to the National Statistics Authority of China:
China’s gross domestic product rose 4.5% in the first quarter of 2023 from the same quarter of 2022, supported by policymakers’ decision to boost growth after tough anti-COVID-19 restrictions were removed in December 2022. China’s consumer price index, a key measure of inflation, rose 0.1% on an annual basis in April 2023, the lowest rate since February 2021, and against 0.7% in March. China’s producer price index, which measures the cost of goods leaving the factory, fell for the seventh consecutive month, and at the fastest rate since May 2020, by 3.6% in year-over-year in April, after falling 2.5% in the previous March, compared to expectations of a 3.2% drop. Industrial production increased by 5.6% in April, compared to the previous year, after 3.9% in March. Retail sales jumped 18.4% from 10.6% in March, marking its biggest increase since March 2021. Fixed asset investment also rose 4.7%, against expectations of 5.5% . According to data from China Customs, exports rose 8.5 percent last month from a year earlier to $295.42 billion, compared with a 14.8 percent increase in March. Chinese imports fell 7.9% year-on-year in April to $205.21 billion. China’s trade surplus rose to $90.2 billion in April from $88.19 billion in March.
Who benefits from the recovery of the Chinese economy?
In his interview with “Sky News Arabia Economy”, economist Dr. Nidal Al-Shaar said, “The impact of the Chinese economy on our daily lives and on the global economic situation is no less important than the impact of the U.S. economy, as Chinese products enter the lives of most people around the world and from all quarters. The Chinese economy also accounts for about 19% of global GDP and 15% of global trade, to where the acceleration of the recovery of the Chinese economy after what it suffered from a suffocating crisis due to the pandemic, which will be beneficial for global economic growth.
Contrary to the tendencies of the governments of the major industrialized countries which focus on the fight against inflation, it seems that the Chinese government is currently focusing on growth, due to the repercussions of the severe restrictions caused by the Corona pandemic and the heavy burden he posed about economic activity in China as many cities were in lockdown under the zero Covid policy, and when the government lifted lockdown restrictions at the end of 2022, his first goal was to boost economic growth , which is even less than what the Chinese government is aiming for, although current economic indicators point to renewed growth in some sectors, according to logo dr.
Promoting growth through government fiscal and expenditure policy
Economist Dr Al-Shaar says the rise in gross domestic product in the first quarter of this year is the fastest growth since the first quarter of 2022. However, it was below the government’s target of 5 % growth, and it was also well below the average growth seen over the decade. However, the main areas of strength were retail sales, up 5.8% year-on-year, exports, up 8.4%, and infrastructure investment, up 8.8%, reflecting the government’s efforts to stimulate growth through fiscal and spending policy.
Despite our forecast for China’s economic growth to accelerate in the second quarter of this year, significant headwinds and headwinds remain and export growth is likely to slow due to the weak global economy and of the expected economic recession. , in addition to some geopolitical issues, foremost among which is the Taiwan issue, which casts a long shadow over the Chinese economy and most economies in the region, in addition to the impact of Western sanctions and restrictions on partners China’s trade, which is expected to continue and even intensify in the coming period, according to Dr. Al-Shaar.
Growth is a priority
For his part, the international economic adviser, Amer Al-Shobaki, explains in statements to “Sky News Arabia Economy” that “the priority of the Chinese government is economic growth, especially since there are still some difficulties in real estate sector and in the industrial production sector, and the Chinese central bank must find appropriate solutions to these problems.
Al-Shobaki says: “The rate of increase in inflation last April, amounting to 0.1%, was weaker than expected and at the lowest pace in two years, which means that there is indicators that need to be watched closely in the Chinese economy, which has emerged from the (zero Covid) restrictions and is seeking an increase in economic growth. Thanks to monetary facilities and increased liquidity from the Chinese central bank (the People’s Bank) and possibly lower interest rates.
The impact of economic blocs around the world on the Chinese economy
Despite the lifting of Corona restrictions, economic growth in this month of May may be lower than expected due to recession expectations which will affect the main economic centers or economic blocs of the world such as the European bloc and the United States, such as The European bloc and America account for more than a third of Chinese exports. Therefore, the impact of growth in these countries affects the Chinese economy, according to Al-Shobaki, who pointed out at the same time as this does not prevent China from achieving economic growth. by 5.5% because the recovery comes from within China, on top of that there are measures that the People’s Bank will continue in monetary easing (increasing liquidity or lowering interest rates ).
In turn, economist Hussein Al-Qamzi believes that China’s main goal after the end of epidemic restrictions has become maintaining economic expansion, noting that China’s gross domestic product increased by 8, 1% in 2021, its fastest rate in ten years. years, and yet inflation was rising. In April 2022, it reached 2.1%, the highest level in the last two years, due to many reasons such as rising commodity prices and supply chain issues in addition to war. between Ukraine and Russia, especially considering that the biggest importer of Ukrainian cereals is China.
In his statement to the “Sky News Arabia Economy” website, Al-Qamzi points out that the Chinese government has implemented a number of measures to combat inflation, such as raising interest rates and releasing grain and oil from strategic reserves, but the effectiveness of these measures has been uneven so far, and he goes on to say that “the Chinese government is trying to strike a good balance between fighting inflation and strengthening the economy to ensure economic growth, although it will be difficult, this is necessary for the Chinese economy to develop in the years to come.”
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