China’s economy grew faster than expected in the first quarter, but official data showed a recent contraction in consumer activity as lockdowns to combat the spread of Covid-19 clouded the country’s growth prospects.

China’s GDP grew by 4.8% year-on-year Expand 4% in the last three months of 2021. On a quarterly basis, GDP grew by 1.3%.

Analysts were expecting a 4.4% year-over-year increase and a 0.6% month-on-month increase.

Retail sales, a measure of consumer spending, fell 3.5% in March, the first year-on-year decline since July 2020 and worse than the expected 1.6% drop, as authorities tightened restrictions in response to the country’s growing crisis. Severe coronavirus outbreak. more than two years. In the same month, the official unemployment rate rose to 5.8%, the highest level since May 2020.

The figures will put more pressure on Chinese President Xi Jinping’s government, which has reaffirmed its commitment to a zero-coronavirus policy despite mounting costs and disruptions in the country’s biggest cities. In April, when economists expected economic activity to worsen, infections rose across China, Shanghai, its financial centerBasically stay closed.

The outbreak of China’s economy and the subsequent string of lockdowns came at a precarious time after a debt crisis and a broader loss of momentum in the property sector. The government is targeting 5.5% growth in 2022, the lowest level in 30 years.

Fu Linghui, a spokesman for the National Bureau of Statistics, said the “generally stable economic operation” but pointed to China’s “frequent outbreaks” of Covid-19 and the “increasingly severe and complex international environment”.

“The country is facing recurring waves of the pandemic in many parts of the country, and its impact on the economy is increasing,” he said.

Data from the first three months do not reflect the full extent of recent events in Shanghai, which fell into China in late March The worst lockdown in the city Since the emergence of the new coronavirus in Wuhan. Analysts at Nomura estimated last week that 45 cities, which account for about 40% of China’s GDP, are in full or partial lockdown, adding that China is at “recession risk.”

Tommy Wu, chief China economist at Oxford Economics, said the 4.8% GDP growth “primarily reflects the January-February increase in official data before economic activity weakened in March”.

He added: “The central government is now trying to strike a balance between minimising disruption and containing the latest wave of Covid-19 infections, but this disruption is likely to last for weeks and will disrupt activity in April and May. Stress, if not longer.”

In stark contrast to the sudden weakness in consumer spending, industrial production, a key driver of China’s initial recovery from the pandemic in 2020, rose 5% year-on-year in March. Fixed-asset investment in the first three months of 2022 increased by 9.3% year-on-year.

Even before the wave of highly contagious Omicron variants accelerated, the Chinese economy was already under siege Debt-laden developer Evergrande throughout the real estate industry.

In a sign of the lingering effects of the crisis, starts for apartments fell 20 per cent in the first three months of the year. Steel and cement production fell by 6% and 12%, respectively, over the same period.

In addition to lowering its annual growth target, the government has also launched a round of monetary easing that includes Lower key lending rates While there have been previous pushes to reduce leverage, this is the first time since 2020.

On Friday, the People’s Bank of China reduce the reserve requirement ratio Add 25 basis points to banks in an effort to inject liquidity into the financial system.

Xi Jinping, who is seeking an unprecedented third term this year, has promoted a “shared prosperity” campaign aimed at reducing inequality.But lockdown measures now dominate the country’s economic trajectory and spark anxiety supply chain disruption.

Chinese Premier Li Keqiang has repeatedly warned of economic risks in recent weeks, after Xi Jinping warned in March that the economic impact of the coronavirus outbreak must be minimized.

Chinese stocks fell after the data, as concerns over a contraction in consumer spending overshadowed higher-than-expected growth in the first quarter.

The CSI 300 index of stocks listed on the Shanghai and Shenzhen stock exchanges fell about 1 percent. Banks were among the worst performers as lenders faced the prospect that easing policy to soften the economic blow from the lockdown could hit profits.

“We definitely think Chinese policymakers are willing to make sure they hit their growth targets,” said Jean-Charles Sambor of BNP Paribas Asset Management.

Additional reporting by Maggie Ding in Beijing