Chinese economy grows 4.8% in first quarter

China's economy grew faster than expected in the first quarter, but official data showed a contraction in consumer activity as measures to counter the spread of Covid-19 weighed on the country's outlook.

China's gross domestic product grew by 4 per cent in the final three months of the year, after growing by 4.8 per cent in the same period a year earlier. GDP grew on a quarter-on-quarter basis.

Retail sales fell by 3.5 per cent in March, the first contraction since July 2020, as authorities intensified restrictions to counter the country's worst coronaviruses outbreak in more than two years.

The data will add to the pressure on the government, which has remained steadfast in its commitment to a zero- Covid policy despite its mounting costs and disruptions across the country's biggest cities. The main financial hub of China, Shanghai, has remained largely sealed off as infections rose in April.

China's economy is in a precarious position following a debt crisis in its real estate sector and a loss of momentum. The government wants growth to be at its lowest in three decades.

The operation of the economy was stable, but there were frequent outbreaks of Covid-19 in China.

With the domestic and international environment becoming increasingly complicated and uncertain, economic development is facing significant difficulties and challenges.

Data for the first three months of the year will not show the impact of the events in Shanghai, which caused China's most severe lockdown since the emergence of coronaviruses. The country is at risk of a recession and 45 cities are under complete or partial lock down.

In contrast to the weakness in consumer spending, industrial production, which was a big driver of China's initial recovery from the pandemic in 2020, added 5 per cent year-on-year in March. The investment in fixed assets rose in the first three months of the year.

China's economy had been hit by a real estate crisis centered around highly-indebted developer Evergrande that spread across the entire property sector.

The government has embarked on a round of monetary easing that led to a cut in crucial lending rates for the first time in years despite a previous push to reduce leverage. The common prosperity campaign is designed to reduce inequality.

The country's economic trajectory has been dominated by the lockdown measures. The premier of China warned of economic risks over the last few weeks, following on from a warning from the president in March.

Maiqi Ding is reporting in Beijing.