Chinese growth resists in the first quarter

In the business district in Beijing on April 18, 2022.

Despite the politics zero Covid implemented by Beijing, Chinese growth showed amazing vigor in the first quarter. According to figures published on Monday, April 18, growth was 4.8% in the first quarter, compared to 2021. This is more than expected by economists who, according to the Bloomberg panel, were instead betting on growth of 4.3%. In the last quarter of 2021, it had been only 4%.

According to the National Statistics Office, growth was driven in March by industrial activity (+5% in one year), investment in fixed capital (+9.3%) while retail sales have decreased (-3.5 %). Urban unemployment has risen to 5.8%, but that of 16-24 year olds is much higher, at 16%.

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If, finally, the first quarter was honorable, the second runs the risk of not being so. When the Shanghai National Exhibition Center – a commercial showcase for this city that wants to be the country’s showcase itself – is transformed into an emergency hospital to house more than 40,000 people with Covid-19, it is all of China that is sick . Because the confinement of economic capital since 1it is April is just the tip of the iceberg: of the hundred main Chinese cities, only thirteen have not implemented any health restriction measures, according to the firm Gavekal Economics.

in slow motion

In the rest of the world, especially in Beijing, everything possible is being done to dissuade the population from leaving the city and transport and logistics companies are living a real nightmare. In this context, also marked by the war in Ukraine, the economy is clearly slowing down.

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In early March, the government had set a growth target of 5.5% per year. A modest figure -in any case, the lowest that China has known for thirty years with the exception of 2020-, but more ambitious than most economists forecast.

While Western central banks tend to raise rates to fight inflation, China cannot afford to cut rates massively.

Faced with a gloomy economic situation, Prime Minister Li Keqiang multiplies meetings and suggests that a recovery plan be prepared, but as long as President Xi Jinping does not question the policy “zero covid”, most measures will have as much effect as a plaster on a wooden leg. Despite everything, the Central Bank announced on Friday, April 15, that the legal reserve rate, that is, the part of the deposits that banks are obliged to keep in their coffers, will be reduced by 0.25 points as of April 25. of April. A decrease intended to encourage banks to extend more credit and thus support the economy.

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