China’s economy rebounded faster than expected, surpassing growth estimates for the first quarter of the year, after the country relaxed its onerous Covid-19 restrictions and consumer spending surged.
The world’s second largest economy grew at a rate of 4.5% compared with the same quarter a year earlier, according to the National Bureau of Statistics. The pace of increase was the fastest in a year and beat the 4% rise forecast by analysts polled by Reuters.
China’s consumer economy showed signs of resurgence, with retail sales rising 10.6% in March, representing the biggest jump in almost two years and more than double the forecast rate. During the same month, industrial production also rose 3.9% compared with a year earlier, a five-month high.
“The speed of the recovery has exceeded even our relatively upbeat expectations,” said Julian Evans-Pritchard, head of China economics at Capital Economics, adding that full-year growth could reach 6%, exceeding the government’s official target of about 5%.
“With consumer confidence on the mend and credit growth accelerating, there is still scope for a further pickup in activity over the coming months,” he said.
China’s economy is accelerating after pandemic restrictions and trade restrictions with the US slowed growth. For almost three years the Chinese government persisted with rolling lockdowns and mass testing to stop Covid-19 from spreading. In 2022, China’s GDP expanded at its slowest pace since the mid-1970s, bar the Covid-hit 2020 year.
After widespread protests in November, health authorities abruptly ended most quarantine requirements and reopened borders for international travellers, creating chaotic scenes across the country as the death toll from Covid-19 suddenly spiked.
Analysts has expressed concern that disruptions to supply chains could dent China’s economic recovery.
In March, China set a modest annual growth target of 5%, while admitting that Covid-19 and other domestic and international factors had affected the country’s economy “beyond our expectations”.