The Chinese economy continued to grow weakly by 4.8% in January to March Business news

Author: JOE McDONALD, AP Business Writer

BEIJING (AP) – China’s economic growth rose to 4.8% in the first three months of 2022, compared to the previous year, as a wave of coronavirus outbreaks led to the closure of industrial sites.

Government data on Monday showed that growth of 4% in the previous quarter rose from 4% after a slump caused by tighter official control of the use of debt by the large Chinese real estate industry. Compared with the previous quarter, as measured by other large economies, growth slowed to 1.3% from 1.4%.

The slowdown in the world’s second largest economy is hurting its trading partners by reducing demand for oil, steel, consumer goods, food and other imports. Oil prices, which jumped after the Russian attack on Ukraine, fell slightly in anticipation that Chinese consumption would weaken.

The suspension “will affect activity in April and May, if not longer,” said Tommy Wu of Oxford Economics in a report. This “is likely to have a significant impact on global supply chains”.

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Economic growth in the first quarter was below the ruling Communist Party’s annual target of 5.5%. Forecasters said it would be difficult to meet without large government stimulus spending.

Retail spending, factory output and investment in factories, real estate and other fixed assets increased.

“The national economic recovery has been lasting and the functioning of the economy has generally been stable,” the government said in a statement.

The numbers of Chinese cases in the latest wave of infections are relatively low, but Beijing is responding to its biggest outbreak since the start of the 2020 pandemic with a “zero COVID” policy aimed at isolating everyone with a positive test.

Authorities have temporarily suspended access to Shanghai, a city of 25 million and the busiest port in the world, and other industrial centers. Global automakers and other manufacturers have stopped or reduced production due to supply disruptions.

The government has already promised tax refunds and other assistance to businesses to pull the economy out of the downturn that began in mid-2021.

Forecasters say Beijing is proceeding cautiously and using targeted stimulus measures instead of widespread spending, which may increase politically sensitive housing costs or increase corporate debt, which Chinese leaders already fear is dangerously high.

Retail sales rose a modest 3.3% from the previous year in the first quarter after consumer demand was dampened by a government call for the public to avoid travel and large gatherings during the February Lunar New Year holidays, usually at a time of high gift spending. donations, banquets and tourism.

Factory output rose 6.5% and investment in factories, real estate and other fixed assets rose 9.3%, probably reflecting official orders from banks to lend faster.

Last week, regulators invested another 500 billion yuan ($ 80 billion) in a loan fund by reducing the amount of deposits that commercial banks have to hold in reserves.

The closure of most companies in Shanghai has raised concerns about disrupting global production and trade. The port operator claims that it operates normally, but the companies claim that the volume of cargo it carries has decreased.

Other cities affected by the temporary suspension of access include Tianjin, the port and petrochemical center east of Beijing; Shenzhen, a financial and technology center near Hong Kong and the manufacturing centers of Changchun and Jilin in the northeast. Smaller cities have also suspended access, closed businesses, ordered residents to stay at home or introduced other controls.

Economists have warned that the spring planting of Chinese farmers, who feed 1.4 billion people, could be disrupted. This would damage economic activity and increase demand for imported wheat and other foods, potentially increasing already high global prices.

China quickly rebounded from the 2020 pandemic, but activity weakened last year as tighter real estate developer loan controls hit construction that supported millions of jobs. This made consumers nervous about spending and investors feared a possible failure of developers.

Financial markets are waiting to see what will happen to one of China’s largest developers, Evergrande Group, which has been trying to avoid repaying the $ 310 billion it owes banks and bondholders since last year.

Smaller developers collapsed or did not repay debts after Beijing reduced the amount of money they could use.

Chinese officials have tried to reassure investors, arguing that the impact on markets and the economy can be limited. Economists say the potential failure of Evergrand should have little effect on global markets.

Chinese National Statistical Office (in Chinese): www.stats.gov.cn

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