• China GDP growth edged up to a still-weak 4.8% yoy

• Retail sales contracted 3.5% yoy in March on widespread COVID curbs across the country

• Industrial production posted growth of 5% yoy in March

• Fixed asset investments grew 9.3% yoy YTD

• Stronger exports growth but imports slowed sharply in March

• CPI and PPI inflation rose in March

• China cuts reserve requirement ratio but kept 1Y MLF unchanged In April

• The mounting cost of China's zero-Covid policy threatens to derail Beijing's ambitious GDP target

China’s economic growth edged up to a still-weak 4.8% yoy in 1Q22 as spreading coronavirus outbreaks prompted shutdowns of major industrial cities. Growth crept up from the previous quarter’s 4.0%, when the economy was slammed by tighter government controls on use of debt by China’s vast real estate industry. First quarter growth was below the official target of 5.5% for the year but 4.8% is not all that weak considering the high base effect of 18.3% yoy GDP growth in 1Q21. GDP expanded 1.3% qoq in the first three months of the year when compared with the fourth quarter of 2021, slowing from the revised 1.5% qoq increase in the previous quarter.

Except for secondary industry, growth has moderated across all the industries in 1Q22. Growth in the secondary industry accelerated 5.8% yoy from 2.5% yoy in 4Q21 whilst primary and tertiary industry growth eased to 6.0% yoy and 4.0% yoy from 6.4% yoy and 4.6% yoy in 4Q21.

The first-quarter GDP growth was strong and it mainly reflects the growth seen in the official January-February data before the weakening in economic activities in March. China's economy slowed sharply in March due to the Covid outbreaks in many cities. Consumption took a hit with retail sales growth turning negative. China has set its GDP growth target for 2022 at "around 5.5 per cent". The Asian Development Bank said earlier this month that China's economy will still grow by 5.0% in 2022, having opted to not revise down its forecast despite the ongoing coronavirus disruptions. The World Bank cut its growth forecasts for China's economy to 5.0% this year, down from a previous estimate of 5.4%.

Source: BIMB Securities Research - 18 Apr 2022