Surge in China’s Consumption Drives Accelerated Economic Growth

China’s economy has been doing better lately! It had a 4.5% growth during the latest quarter (from January to March) compared to a whole year ago and that was faster than old growth of 2.9%. After people stopped following anti-virus guidelines, more shoppers returned to stores and restaurants, which boosts economic activity and helps with the country’s growth.

Officials in China warn that the country may experience difficult trade pressures because of a choppy world economy. Fu Linghui, from the National Bureau of Statistics in China, said the government will try to support economic growth and purchase products from home by making specific policies. They also want to aid companies that are just starting out.

China’s economy is growing faster than expected this quarter because people are spending more in shops, restaurants and other places now that restrictions have been lifted. Analysts predicted the country’s economic growth would be about 4%, but China’s government hopes it will be around 5%.

In March, the amount of goods that people were buying increased by 10.6% compared to the same time last year. This was also 7.1 percentage points higher than during the first two months of this year.

An economist from Oxford Economics said that as more and more people become confident again in buying things, it looks like this revival will continue for a while.

People are buying more things and stores are making more money, but other economic numbers like how much factories make and investments in building things aren’t doing as well. That means prices aren’t rising like they should – it’s a sign that people don’t have enough money to buy what they want. In March, we saw industrial production (things made in factories, mines and power plants) go up by 3.9%, but this is still below what we would expect to see if everything was going perfectly.

China invested 5.1% more money into infrastructure and other projects during the first three months of 2023 compared to the same period last year. This growth was lower than what happened in the first two months of the year, which had a growth rate of 5.5%. Private investments were not as strong and grew by only 0.6%.

China’s exports increased in March and during the first three months of the year, they rose by 8.4%. The number of people without jobs living in cities dropped to 5.3%, but for youth, the rate was much higher at 19.6%. This is one of the highest figures ever recorded.

People who invest money are closely watching China’s first-quarter economic numbers in 2021 to see if the country is starting to get back on its feet again after a year of tough lockdowns blocking people from leaving their homes.

2020 was really bad for the Chinese economy, causing it to drop 3% due to all the shut-downs and quarantines.

Oxford Economic’s Loo reported that due to all the lockdowns from COVID-19 in Shanghai last year, the economy was affected and the GDP is expected to increase. Still, the growth rate might not stay much longer as things like slower consumption, decreased fiscal stimulus, and less incoming external demand are likely to slow it down again by the end of this year.

On Monday, China’s bank decided not to change their loans for a one year policy. The week before that, they promised to provide more help so the economy could grow and there would be enough money available.