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China’s Q1 GDP data for March impressed but that wasn’t enough to get markets excited to start the day. Perhaps the optimism has already been baked in, as the strong rebound in activity comes after China lifted Covid-19 restrictions in December last year.
The Chinese economy grew by 2.2 percent on a seasonally adjusted basis in the three months to March of 2023, picking up from an upwardly revised 0.6 percent growth in the fourth quarter and matching market forecasts.
This was the third straight quarterly expansion, coming after Beijing lifted COVID curbs last December and eased a three-year crackdown on tech firms and property.
Chinese economy advanced 4.5% on a year-on-year basis in Q1 of 2023, accelerating from a 2.9% growth in Q4 and topping market estimates of 4%. This was the strongest pace of expansion since Q1 of 2022, amid efforts from Beijing to spur the post-pandemic recovery.
Retail sales growth was at a near 2-year high in March, industrial output rose the most in 5 months, and surveyed jobless rate fell to its lowest in 7 months.
Data released earlier showed that exports from China unexpectedly rebounded last month due to efforts to grow trade further with developed countries and explore new possibilities with emerging economies, bringing a larger-than-expected trade surplus.
However, the statistics agency mentioned in a statement that a complex global environment and insufficient domestic demand mean the foundation for the economy’s rebound is “not yet solid.”
China set a modest growth target at around 5% for 2023. Last year, the economy grew by 3%, missing the government’s target of around 5.5%
That said, recent data showed the recovery remains uneven, with consumption, services, and infrastructure spending perking up but slowing inflation and soaring bank savings raising doubts about demand.
Meantime, the central bank cut the lenders’ reserve requirements (RR) for the first time this year in March while Beijing pledged to launch more fiscal stimulus.
