China first quarter report: key takeaways

China presented first quarter economic performance report on April 18, 2023. The report shows China’s economy is rebounding. It achieved remarkable growth against all odds. Though, the first month of the quarter was occupied with annual celebrations, the economy still accelerated.

A deep analysis of the report highlights four key messages. First, Chinese economy is resilient to internal and external shocks. It can absorb shocks and rebound quickly. Though, major economies are still not able to recover fully, the Chinese economy is showing all elements of recovery.

Second, Chinese economy is able to absorb external shocks like US trade and technology war. The US restricted activities of Chinese technological companies. Simultaneously, the US is pushing allies to ban Chinese companies on the basis of self-assumed assumption of spying. Semi-conductors and chips are the most recent entrants to sanction list.

Besides, Russia-Ukraine crisis has also impacted supply chains, and European countries are facing the worst consequences of the conflict. Despite all these externalities, China’s economy is getting momentum and is on way to further acceleration.

China has become gravity centre of world economy. International institutions – IMF, World Bank etc.– are acknowledging the growing influence of China. IMF claims China will be the biggest driver of world growth during the next five years.

It was calculated by Bloomberg that China’s share in the global growth would be around 22.6 percent, almost double to US share, 11.3 percent. That’s why leading media outlets, think tanks and business organisations were curiously waiting for the release of data. Media outlets and think tanks were also running pools to grasp the momentum of economy.

Besides, recent rush of world leaders to China reinforces the assumption. We have seen many leaders from Europe, Asia, Africa and Latin America travelling to China during the last few months. They are visiting China in the hope to consolidate their relationship with a big country. They want to secure better deals for their countries and deem it necessary to get the economy revived, avoid potential recession and materialise the dream of sustainable development.

China is moving towards high-quality growth and development model. The first quarter report explicitly pointed out China has taken many steps that are ensuring implementation of high-quality growth vision. Analysis of data indicates renewable energy generation, from wind and solar, exhibited astounding growth rate of 21.8 percent.

Further, new energy automobiles have also shown exceptional growth. It was pointed out that sale revenues increased by 35.2 percent. High-tech industry, especially in the field of green energy, high-quality industrial production and supply chain, also observed a substantial increase. Data shows high-tech industry grew by 16 percent.

Moreover, China will accelerate its efforts to promote and implement the vision of high-quality development. For that purpose, China is asking local governments to promote and encourage new energy vehicles. There will also be focus on home appliances.

The old policy will be accelerated and people will be encouraged to move towards efficient and environment-friendly appliances. It shows China is not only talking about big things, but also taking care of small things. It is a clear sign of Chinese’s commitment to high-quality growth and development.

The report shows domestic consumption exhibited a remarkable growth. It exceeded the projection. According to data, it posted a growth rate of 10.6 percent against the projected rate of 7.1 percent. Domestic sale of consumer goods at the retail market level reached at 11,492.2 billion yuan ($1,672.51 billion). Rural areas surpassed urban areas and posted a growth rate of 6.2 percent against 5.7 in urban areas. It is the result of pro-rural area policies of the government of China under the vision of rural revitalisation.

It is an extremely important indicator in the backdrop of growing Sinophobia. We know the US is leading the campaign to decouple from China. The US is putting all efforts to shrink global market space for China. Covid-19 and Russia-Ukraine war have highlighted the risks and urgency to take measures to mitigate negative implications.In this backdrop, it was essential China give a push to domestic consumption.

Now, its anticipated consumption market will keep on expanding in coming years due to two factors. First, Chinese domestic market will go through major transformation. It has been predicted that middle class will comprise 500 million people in 2025, which will jump to 750 million people in 2035. This transition will usher a new era of domestic consumption.

Second, income of common citizens, especially in rural areas, is on constant rise, which means people will have surplus consumable income. Further, expansion of social security system will encourage people go for more consumption.

This trend will help China at two levels. It will strengthen resilience of China against sudden shocks and externalities and will consolidate status of China as epicentre of global trade and economy.

In conclusion, despite all odds, the Chinese economy kept on growing. It used the momentum to accelerate global growth. It is expected further acceleration of economic activities will help global community move ahead to achieve development agenda.

Lastly, expansion of domestic market and development of high-tech industry will lower Chinese dependence on global markets. Thus, China would be in a better position to fight blackmailing tactics of some major powers.