In a period of questions about the trajectory of the Chinese economy, the data on its progress in the first quarter, published Tuesday April 16, are likely to reassure, but not to close the debate on two crucial subjects: the low confidence of households and the problem of overcapacity. The second largest economy on the planet recorded growth of 5.3% over the first three months of 2024, according to the National Bureau of Statistics, symbolically beyond the 5.2% of the whole of 2023 as well as the target set by Beijing of GDP growth of around 5% for this year.
The Chinese economy has struggled to restart after the abandonment of the “zero Covid” policy, which kept it largely cut off from the world and while the real estate market, long one of the engines of growth for a country in phase of urbanization, is in crisis. Economists therefore have their eyes glued to the details of these statistics to find out what is pulling China into the post-Covid-19 pandemic era. “Growth is better than expected”notes Wang Tao, chief economist for China at UBS bank.
Industrial production plays an important role in this new model. It increased by 6.1% over three months compared to the same period in 2023, but slowed down, from March, with an increase of 4.5% compared to 7% in January-February. Chinese President Xi Jinping has made the development of “new quality productive forces” his leitmotif. And, in fact, the high-tech sector is growing by 7.5%. But China’s productive apparatus is far from operating at full capacity: industry is at 73.6% of its capacity, the lowest in four years, while it was operating at 75% over the last three months of 2023.
Which will not fail to fuel the debate on Chinese overcapacity. They are causing growing tensions with China’s trading partners, including the European Union, which has already opened anti-dumping investigations into state subsidies, particularly in the electric automobile and wind turbine sectors. According to the Bloomberg agency, Brussels could also launch, in the coming days, a procedure concerning the closure of the Chinese market to foreign medical devices, one of the sectors where calls for tender are regularly closed to non-Chinese suppliers.
Replacement of industrial equipment
Highly scrutinized, indicators relating to domestic demand show mixed results, suggesting that Chinese households remain in uncertainty. Retail sales increased by 5.5% in January-February, a period which includes the Lunar New Year holidays, sources of spending, but only advanced by 3.1% year-on-year in March, i.e. 4 .7% over the three months. The service industry, including hotels and restaurants, helped during the Chinese New Year. “The recovery is continuous, but modestnotes Mme Wang. Consumer confidence still needs to improve. »
You have 38.19% of this article left to read. The rest is reserved for subscribers.