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How backward in terms of China’s economy in the first quarter

China's economy

 

Six sectors with 33% of GDP expanded at a slower pace than the country

Sectors that make up a third of China’s economy expanded at a slower rate than the national growth rate in the first quarter. Which underscores the extent of the damage caused by the worsening COVID outbreak and the widespread lockdown.

According to the local statistics bureau, six provincial-level jurisdictions – all of which faced an increase in infections in the January to March period. – The national GDP growth rate lags behind by 4.8%.

This includes Guangdong and Jiangsu provinces, the country’s two largest provincial economies, which grew by 3.3% and 4.6%, respectively.

Mainland China’s economy grew at a third slower than the national rate

In Guangdong, Shenzhen Technology Center was closed for a week in March. While the manufacturing base Dongguan saved factory activity by keeping workers in a so-called closed-loop. where they lived on site and were frequently tested. Several cities in Jiangsu, including Suzhou, a major electronics hub near Shanghai, also tightened controls as infections escalated.

Others included Henan, Liaoning, Shanghai, and Tianjin. The latter, a port city that recorded China’s first community spread of Omicron in January, expanded by only 0.1% and was struggling before the latest outbreak. The quarter ended ahead of the bulk of Shanghai’s ongoing lockdown.

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The first-quarter figures made public so far include 28 of China’s 31 provincial-level jurisdictions. Jilin, Xinjiang, and Tibet, which contributed just 3.13% of the national GDP, have yet to disclose the results.

Consumer spending was also weak in the hardest-hit provinces, with national quarterly retail sales growth down 3.3%. Retail sales in Guangdong rose 1.7% in the first quarter from a year earlier, while sales in Jiangsu rose just 0.5%. Sales in Shanghai were down 3.8 percent. Tianjin sales were down 3.9%.

Investment and industrial production also surprisingly strong

Jiangxi province was the best performer of the quarter, with its economy growing 6.9%. The southeastern province, known for its production of fine porcelain, is home to 45 million people and recorded an 8.9% increase in retail sales. Investment and industrial output in Jiangxi were also surprisingly strong, with the growth of 15.6% and 9.5%, respectively.

China’s overall development outlook is weakening. However, as the lockdown in places like Shanghai and as in Beijing, cases start increasing. Strict sanctions are expected. Economists have slashed their growth projections on strict adherence to its COVID zero policy in the country. According to the latest survey conducted by Bloomberg News, GDP is expected to grow by 4.9% in 2022. Which is much less than the government’s target of about 5.5%.

As market confidence falls and the pressure on the economy increases. The government has made consistent promises of support – although investors are wary about the lack of follow-through.

The Communist Party’s Politburo – its top decision-making body – has had the opportunity to signal change during its quarterly economic meeting this week.

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