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According to data released on Monday by the National Bureau of Statistics, China's first-quarter GDP grew faster than expected, despite the impact of Covid lockdowns in parts of the country in March. The first-quarter GDP increased by 4.8 percent, exceeding expectations of a 4.4 percent increase from the previous year.
Fixed asset investment increased by 9.3 percent year on year in the first quarter, exceeding expectations of 8.5 percent growth. Manufacturing investment increased by 15.6 percent year on year in the first quarter, while investment in infrastructure increased by 8.5 percent. Industrial production increased by 5% in March, exceeding the forecasted 4.5 percent increase.
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Retail sales, on the other hand, fell by a larger-than-expected 3.5 percent year on year in March.
Since March, the country has struggled to contain its worst Covid outbreak since the pandemic's initial phase in 2020. Lockdowns in more than half of the country at the time resulted in a 6.8 percent drop in first-quarter growth from the previous year.
Rise of unemployment in China
According to official data, the unemployment rate in 31 major Chinese cities rose from 5.4 percent in February to 6 percent in March, the highest on record.
Zhiwei Zhang, chief economist at Pinpoint Asset Management said, "This suggests that the unemployment problem in major cities has worsened since the Covid Pandemic began in 2020,"
"The Covid outbreaks only caused lockdowns in Shanghai and a few other cities in late March and early April. As a result, the economic slowdown most likely worsened in April "He added.
Three years of Covid and new challenges for China
As Covid enters its third year, China faces the challenge of ensuring that a record number of graduates find work. From 2021 to this year, the number of higher education graduates is expected to increase from 1.67 million to 10.76 million.
The unemployment rate for those aged 16 to 24 remained far higher in March, at 16%, the highest since August 2020.
Overall, the national urban unemployment rate rose to 5.8 percent in March, up from 5.5 percent in February.
According to a CNBC translation, the rise "reflects greater difficulties for businesses' production process, as well as greater pressure on employment," Fu Linghui, spokesperson for the National Bureau of Statistics, said at a briefing Monday in Chinese.
He stated that since March, some individuals have had a more difficult time finding work due to the domestic impact of Covid.
China's expectations
Because retail sales and trade have a constrained potential to advance to growth, the market expects real estate to play a larger role.
Real estate, which has continued to struggle since Beijing's cracking down on developers' excessive use of debt, saw investors rise by 0.7 percent year on year in the first quarter. Despite double-digit declines in floor space and total commercial building sales. Although economic data for January and February exceeded all expectations, figures for March have begun to represent the impact of stay-at-home orders and visa restrictions around economic centers such as Shanghai's coastal metropolis.
According to Bruce Pang, head of macro and strategy research at China Renaissance. To achieve this year's 5.5 percent economic growth target, ingestion must not be weighed down by the pandemic, property investment must stop falling and stabilize as soon as possible, fiscal spending must be strong enough, and imports and exports must not contribute negatively.
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