China’s Economy Shows Signs of Recovery in 2021, But Challenges Remain
China's economy is showing signs of recovery after the strict Covid-19 restrictions put in place since 2020. Data released by the National Bureau of Statistics on Wednesday revealed industrial production rose 2.4% in February from the same period last year, with fixed asset investment increasing 5.5%.[0] Retail sales also grew 3.5% year-on-year in the January-February period, reversing a 1.8% fall in December.[1]
The strong figures indicate the Chinese economy is well on track with the recovery, after posting one of its weakest years for growth in decades in 2022.[2] This is also evidenced by the factory output from large, state-owned enterprises in February, which hit the highest level in more than a decade.
However, there are still some weak spots in the data, such as the 5.7% drop in property investment from a year ago in the first two months of the year, and a 3.6% contraction in property sales by floor area.[3] The surveyed urban jobless rate also came in at 5.6 percent in February, 0.1 percentage point higher than that in the previous month.[4]
At the recently concluded session of the National People’s Congress, the government established a measured growth plan for the current year, aiming for a GDP growth of approximately 5%, and a goal of 12 million new jobs created.[5] Li Qiang, the new premier who began his term on Saturday, acknowledged that attaining the set goals will not be a straightforward endeavor.[3]
Analysts from Capital Economics said that the fading of virus disruptions had led to a rapid improvement in economic conditions at the start of the year, while Iris Pang, chief economist, Greater China at ING, said they had retained their GDP forecast for China at 5% for 2023 due to headwinds such as exports and local government debt.[3]
Overall, it appears that China's recovery is broadly on track, with consumption taking over as the engine of growth, and infrastructure investment providing support.[2] However, rising youth unemployment and said headwinds remain a risk, and the Chinese government will need to ensure these are addressed if it is to meet its growth targets.
0. “Chinese industrial production rises in Feb, but misses expectations By Investing.com” Investing.com, 15 Mar. 2023, https://www.investing.com/news/economic-indicators/chinese-industrial-production-rises-in-feb-but-misses-expectations-3030665
1. “China's economy shows signs of recovery” ShareCast, 15 Mar. 2023, https://www.sharecast.com/news/international-economic/chinas-economy-shows-signs-of-recovery–12678140.html
2. “China's Economy Rebounds, Spurred by Consumption – WSJ” The Wall Street Journal, 15 Mar. 2023, https://www.wsj.com/articles/chinas-economy-rebounds-spurred-by-consumption-d5975d0b
3. “China's economic recovery is on track. But youth unemployment is getting worse | News Channel 3-12” KEYT, 15 Mar. 2023, https://keyt.com/news/2023/03/15/chinas-economic-recovery-is-on-track-but-youth-unemployment-is-getting-worse/
4. “China's economy continues to pick up – Chinadaily.com.cn” China Daily, 15 Mar. 2023, http://www.chinadaily.com.cn/a/202303/15/WS64112709a31057c47ebb48e4.html
5. “China's economic recovery is on track. But youth unemployment is getting worse” erienewsnow.com, 15 Mar. 2023, https://www.erienewsnow.com/story/48552247/chinas-economic-recovery-is-on-track-but-youth-unemployment-is-getting-worse
