With ‘Zero Covid’ Behind It, China’s Economy Starts to Recover

The economy grew 4.5 percent in the first three months of the year, a sizable pickup from the end of 2022.

With ‘Zero Covid’ Behind It, China’s Economy Starts to Recover

The industrial production, which includes factories, mines, and power plants, rose by 3.9 percent over the previous year in March, a significant improvement from the 2.4 percent recorded in January and Febraury. The industrial growth in China was anemic. One of the main reasons was the sharp decline in the auto industry.

The first quarter saw a drop of 13.4 percent in car sales. China ended December by letting subsidies for electric cars expire and re-instated a tax on gasoline powered cars.

Exports have recovered and increased by 14.8% in March. The factories are working to catch up with the backlog of orders accumulated since "zero Covid".

The Chinese economy has always been supported by investment in factories, apartment buildings, and roads. Fixed asset investment has grown by 5.1 percent compared to last year's first quarter. Beijing is not happy with the investment pattern.

In the first quarter of this year, government spending on rail lines, roads, and other infrastructure increased by 8.8 percent. Manufacturing investment increased by 7 percent.

Real estate is one of the few sectors that demonstrates China's challenges more than any other.

Housing developers have started very few new housing projects after running out of money over the last two years. Prices are also starting to stabilize. Investors remain cautious: Sunac China Holdings' share price plunged by 59 percent when trading resumed last week after it had been suspended for one year.

Many people are reluctant to invest in painting or furnishing their new apartment. Customers have vanished from a paint shop located down the road from Mr. Guo’s electric repair shop.

The store owner who went by the name of her family, Lu, said, "We are out of business." "Nobody comes."

Li You contributed research.