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Stability first: Understanding China's Q1 GDP growth data
Hannan Hussain
A container terminal in Lianyungang, east China's Jiangsu Province, April 13, 2022. /CFP

A container terminal in Lianyungang, east China's Jiangsu Province, April 13, 2022. /CFP

Editor's note: Hannan Hussain is a foreign affairs commentator and author. He is a Fulbright recipient at the University of Maryland, the U.S., and a former assistant researcher at Islamabad Policy Research Institute. The article reflects the author's opinions and not necessarily the views of CGTN.

Data released by the National Bureau of Statistics (NBS) on April 18 showed China's first quarter GDP expanded by 4.8 percent from a year earlier, exceeding expectations. China's per capita disposable income also arrived at $1,623 during Q1, translating into a nominal year-on-year increase of 6.3 percent. 

Demonstrated impetus during the first two months, despite COVID-19 disruptions, strengthens the case for China's economy to negotiate known challenges and navigate an uncertain international environment. "We need to be highly vigilant for unexpected changes in the international and domestic situations, and downward economic pressure has further mounted," cautioned Chinese Premier Li Keqiang a week ago. Some takeaways from the NBS release.

First, final consumption as a share of China's first quarter GDP bordered on 70 percent. Though down from 85.3 percent in comparison with the final quarter of 2021, the difference is far from drastic. Shenzhen and Shanghai's own exposure to strict anti-epidemic measures gave way to understandable constraints on consumption in March, a response not unusual given that Beijing prioritizes its dynamic zero-COVID policy to lay groundwork for effective growth conditions. Also notable through the release is that in the same period last month, China's GDP navigated some pandemic disruptions to signal growth resilience: industrial output still rose by 5 percent.

Second, fixed asset investment represents optimism through an increase by over 9 percent (year on year) in the first quarter, thanks to a broader double digit increase in the first two months of 2022. Part of the stability stands supported by a prudent policy push for publicly funded projects to accelerate growth this year. 

Look at the first two months: infrastructure investment by China shot up considerably, helping it broaden the options for stimulating growth this year beyond export-driven growth, which faces some uncertainty beyond borders. China's large-scale issuance of local-government special bonds can also step-up project construction, undergird stabilization measures, and help economic growth better align with stated expectations this year.

In short, Beijing continues to recognize that stimulating growth this year requires strategic investment decisions, particularly with global supply chains still recovering. Despite downward pressure, China's 4.8 percent Q1 GDP is in many ways an indicator that the country's infrastructure and property investment push is headed in the right direction.

A free nucleic acid testing site at Longquan Park in Jingmen, Hubei Province, April 18, 2022. /CFP

A free nucleic acid testing site at Longquan Park in Jingmen, Hubei Province, April 18, 2022. /CFP

Third, towards the latter leg of the first quarter, China dedicated significant energies to coordinating its dynamic zero-COVID policy, and ensuring that promptly controlled virus flare-ups promote conducive conditions for growth too. Some keen observers of Beijing's economic thinking saw the wisdom in such strict but rewarding measures: among prospective merits is that effective virus controls can spur multilevel investments, including those centering on infrastructure, to better achieve the desired annual growth target of 5.5 percent. 

Since the broader growth objective remains annual, NBS data reminds us that on key levels, including industrial output, China's effort to negotiate COVID-19 disruptions and stimulate growth will reap dividends. After all, industrial output rose 6.5 percent year on year in the first quarter, with a 7.5 percent increase witnessed in January and February. This was a time when disruptions from the pandemic were less pronounced. And so, China's aim to overcome periodic flare-ups could bring disruptions under control, effectively serving the interests of industrial output going forward too.

All told, China's first-quarter GDP growth represents an important uptick by several metrics, when compared with the last quarter of 2021. As a noticeable degree of uncertainty marks the international growth climate, Beijing is correct to recognize the need for stimulating momentum through target investments within its borders. 

It is here that rapidly increasing infrastructure investment and strong investment momentum on property add perspective to China's first-quarter growth, while the constraints faced during the same period produce valuable lessons for whole-year growth achievement.

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