China’s economy rebounds post easing of covid curbs

China’s economic growth accelerated in the latest quarter as consumers flocked back to shops and restaurants following the abrupt end of anti-virus controls.

The 4.5% growth in gross domestic product from January to March compared to the same period in 2022 was the fastest in the past year, and outpaced the 2.9% growth in the previous quarter, according to government data released Tuesday.

But authorities cautioned that China will likely face import and export pressures in the coming months amid an uncertain international economic environment, and also warned of inadequate domestic market demand in the world’s No. 2 economy.

Fu Linghui, the director general of China’s National Bureau of Statistics, said Tuesday that authorities will implement various policies to 'stabilize growth' and stimulate domestic demand, as well as help support the development of emerging industries.

The higher-than-expected rise in GDP for the quarter comes amid a rebound in consumption, as people flocked to shopping malls and restaurants after 'zero-COVID' restrictions were removed at the end of 2022. Analysts initially pegged economic growth to be about 4%.

Earlier this year, China’s government set this year’s economic growth target at 'around 5%,' a conservative target that will only be met if GDP grows faster in the months ahead.

In March, total retail sales of consumer goods went up by 10.6% year on year, and grew 7.1 percentage points compared to the first two months of the year.

'The combination of a steady uptick in consumer confidence as well as the still-incomplete release of pent-up demand suggest to us that the consumer-led recovery still has room to run,' said Louise Loo, an economist at Oxford Economics in a note.

'The fading of consumption momentum, the winding down of fiscal stimulus, and a weaker incoming external demand would put downward pressure on domestic growth in H2,' she said.

On Monday, China’s central bank kept rates on its one-year policy loans unchanged. Last week, it had vowed to step up support for the economy and maintain ample liquidity to support growth.