China today announced an economy growth of 4.8%, on an annual basis, in the first quarter, despite the confinement by covid-19 in several cities, including Shanghai, the main business center of the country.
The rise in the first quarter surpasses the 4% growth recorded in the same period in 2021, China’s ONE (National Bureau of Statistics) said.
The Chinese economy faces “important challenges”, admitted Fu Linghui, director of ONE.
The second largest economy in the world began to slow down in the second half of 2021 with the crisis in the real estate sector and the increase in cases of covid-19, which caused confinements in several cities.
Health restrictions in major cities across the country, including Shanghai and the tech hub of Shenzhen, also affected retail trade and employment figures.
The growth data, however, does not fully reflect the impact of the lockdown in Shanghai, which has left millions of people at home for several weeks.
In this way, pressure is growing on the authorities to reach the 5.5% growth target for 2022, a crucial year for President Xi Jinping, who aspires to remain in power for another five-year term.
“We must understand that with the increasingly complicated and uncertain local and international scenario, economic development faces increasing difficulties and challenges,” Linghui said in a statement.
In addition to the increase in coronavirus cases, sanctions against Russia for the invasion of Ukraine also affect the Chinese economy.
China has this year seen an increase in industrial production and consumption has been spurred by the Lunar New Year holiday, but travel restrictions imposed in March by the pandemic have taken a toll on the economy.
Industrial production rose 5% in March, down from January and February, according to ONE.
At the same time, retail trade fell 3.5% and urban unemployment rose to 5.8% in March, according to the statistics agency.
“March activity suggests that the Chinese economy has slowed, especially domestic consumption,” said Tommy Wu, chief China economist at Oxford Economics.
The Chinese government is trying to strike a balance between “minimizing the disruption (of the economy) and containing the new wave of Covid-19 contagions”, Wu added, before warning that the pressure on the economy could continue until May or even longer. time.
Last week, automakers such as XPeng and Volkswagen warned of serious disruptions to the supply chain and possibly a production halt if the confinement persists in Shanghai, a metropolis of 25 million people.
The container port of Shanghai, the busiest on the planet, registers a backlog of products, which led the shipping group Maersk to announce the interruption of shipping reefer containers to the city.
“More impacts from the lockdown are imminent,” warned Iris Pang, chief China economist at ING.
Pang said other cities could try to replicate the success of Shenzhen, which quickly resumed activities by adopting strict measures with few Covid-19 patients.
Shenzhen, a tech powerhouse in the south of the country, remained in lockdown for a week after a Covid-19 outbreak in March, but soon lifted restrictions.
Shanghai on Monday recorded its first three deaths from Covid-19 since the start of confinement in March. The city recorded 22,000 new cases of coronavirus in 24 hours.