The lifting of restrictions imposed because of the coronavirus has led to an uptick in consumer spending, industrial output, and investment in China this year. Nonetheless, rising unemployment and a further fall in real estate investment have been cited as possible threats to economic recovery, prompting warnings.
While sluggish global demand and a sustained slowdown in the property sector posed obstacles, economic activity in China rebounded in the first two months of 2023 as consumption and infrastructure investment pushed recovery from pandemic disruption.
On Wednesday, March 15, the National Bureau of Statistics reported a 3.5% increase in retail sales from January and February compared to the same months in 2022. The recovery was partly fueled by a rise in infrastructure expenditure by local governments, which led to a 2.4% gain in industrial production and a robust expansion of fixed-asset investment. In contrast, the unemployment rate rose, suggesting domestic demand was weak.
China’s $18 trillion economy, which had seen one of its lowest growth rates in almost half a century, was boosted when it abandoned COVID-19 restrictions late in 2022. Experts anticipate momentum to improve further in the following months.
Fu Linghui, a spokesperson from the NBS, stated:
“China’s overall economic performance is showing a trend toward stabilization and recovery.”
China sets modest annual growth target of around 5% this year
According to the Government Work Report presented at the opening session of the 14th National People’s Congress, China plans to raise its GDP by roughly 5% in 2023 and its consumer price index by around 3%.
Fu noted that increasing internal demand was the key to economic development since the external situation was still unclear and volatile.
“We still need to put our strength on the basis of our own development, promote the expansion of domestic demand and stabilize economic growth. With the gradual recovery of employment and the growth of residents’ income, the consumption will significantly improve the overall economic performance,” Fu said.
According to Fu, the greater propensity to spend money among Chinese consumers would lead to a better year for encouraging consumer expenditure than in 2022.