First-quarter solid recovery proves China’s economic resilience despite challenges

China released its first quarter economic data on April 18, which showed that the economy is rebounding. Against all odds, the nation achieved remarkable growth, and it is expected that momentum will pick up further in the second quarter. 

A deep analysis of the first quarter report highlights four key messages: 

First, the Chinese economy is resilient to both internal and external shocks. It can absorb the shocks and rebound quickly. While other major economies are still not able to fully recover, the Chinese economy is showing all elements of recovery.

The Chinese economy overcame the US’ trade and technology war. Washington restricted activities of Chinese technology companies in the US. Simultaneously, the US is pushing its allies to ban Chinese companies on the arrogant assumption of Chinese spying although web leaks prove US spying on China and even US allies, with semi-conductors the most recent entrant to the sanction list. 

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

Against this backdrop, it was necessary that China give a push to domestic consumption. It is anticipated that the domestic market will keep expanding in the coming years due to two factors

Second, China has become the center of gravity for the world economy. International institutions, including the IMF and World Bank, acknowledge the growing influence of China. The IMF has said that China will be biggest driver of world growth during the next five years. 

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Bloomberg calculated that China’s share of global growth will be around 22.6 percent, almost double the US’ share of 11.3 percent. That is why leading media outlets, think tanks and business organizations had eagerly awaited the Chinese economic data and pored over the figures. 

The recent rush of world leaders to China also reflects the Chinese economic reality. We have seen many leaders from Europe, Asia, Africa, and Latin America visit China over the last few months. They have visited in the hope of consolidating their relationship with Beijing. In this way, they want to secure better deals for their countries. They deem it necessary to revive their economies, avoid potential recession and materialize the dream of sustainable development. 

Third, China is moving toward a high-quality growth and development model. The first-quarter report explicitly pointed out that Beijing has taken many steps which are ensuring the implementation of this high-quality growth vision. Analysis of data indicates that renewable energy generation, from wind and solar, exhibited an astounding growth rate of 21.8 percent in the first three months of 2023. 

Further, new energy vehicles also showed exceptional growth. It was pointed out that sales revenues increased by 35.2 percent. 

High-tech industry, especially in the field of green energy, high-quality industrial production and supply chain, also witnessed substantial growth. Data show that high-tech industry grew by 16 percent. 

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

A “new for old” policy will be accelerated and people will be encouraged to move towards efficient and environment-friendly appliances. This shows that China is not only talking about big things, but also taking care of small things. It is clear sign of the nation’s commitment to high-quality growth and development. 

Fourth, the report shows that domestic consumption exhibited remarkable growth and exceeded the projection. According to data, consumption grew by 10.6 percent against a projected growth rate of 7.1 percent. Domestic sales of consumer goods at the retail market level reached 11.49 trillion yuan ($1.67 trillion). 

Rural areas surpassed urban areas, posting a growth rate of 6.2 percent against 5.7 percent in urban areas. This is a result of the Chinese government’s pro-rural policies under the vision of rural revitalization. 

Domestic consumption is important in the face of growing Sinophobia. As we know, the US is leading a campaign to decouple from China. Washington is putting all of its effort into shrinking the global market space for China.

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Domestic consumption is also required in the presence of growing friction and disturbance in global supply chains. COVID-19 and the Russia-Ukraine conflict have highlighted risks and the urgent need to take measures to mitigate negative implications. 

Against this backdrop, it was necessary that China give a push to domestic consumption. It is anticipated that the domestic market will keep expanding in the coming years due to two factors. 

First, the Chinese domestic market will go through a major transformation. It has been predicted that China’s middle class will total 500 million people in 2025, which will jump to 750 million people by 2035. This will usher a new era of domestic consumption. 

Second, the income of common citizens, especially in rural areas is on a constant rise which means people will have more disposable income. Further, the expansion of the social security system will also encourage people to spend more. 

This trend will strengthen resilience of China against sudden shocks and externalities, and consolidate China’s status as the epicenter of global trade. 

In conclusion, against all odds, the Chinese economy has kept growing and China used this momentum to accelerate global growth. Hence, it is expected that further acceleration of economic activities in China will help the global community to move ahead and achieve its development agenda. 

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

The author, a political economist, is CEO of the Asian Institute of Eco-civilization Research and Development in Pakistan and author of Understanding China for Future Cooperation. The views do not necessarily reflect those of China Daily.