Two of China’s growth drivers – exports and domestic demand – appear to be underperforming, putting pressure on policymakers to ensure that China’s post-Covid economic recovery goes to plan
Several recent Reuters analyses, including from CBBC’s former policy analyst Joe Cash, suggest that China’s economy has lost some momentum at the start of the second quarter of 2023.
Economic figures for April, while often reaching double figures, fell below the estimates of economists polled by Reuters. Industrial output grew 5.6% year-on-year, below an estimated 10.9%, although exports exceeded expectations by 0.5%, growing by 8%. Retail sales, used as a gauge of consumption, grew 18.4% year-on-year, falling short of a predicted 21%.
It should be noted that these figures are skewed by the negative impact of anti-Covid lockdowns in April last year.
One area that has shown on-target growth is online retail sales, which rose 8.6% year-on-year to RMB 3.29 trillion (£376.7 billion). Short video platforms Douyin and Kuaishou in particular saw massive growth, with China Skinny reporting that their combined sales in Q1 of 2023 were 97% of the value of sales on Tmall, with fashion and personal care and cosmetics demonstrating particularly high merchandise values.
Analysts expect that the government will start to take a more proactive approach in ensuring that the country’s post-Covid recovery remains stable, such as cutting interest rates. The government has already announced plans to boost employment and trade as it tries to meet its modest economic growth target of about 5% in 2023 after missing last year’s goal.
