The Chinese economy shows signs of recovery after lifting the COVID-19 restrictions

In the first two months of 2023, economic activity in China has increased due to investments in consumption and infrastructure to recover from the impact of the pandemic disruptions.

This growth was achieved despite challenges such as weak global demand and continued decline in the real estate sector.

China’s decision to lift the restrictions that were imposed to combat COVID-19 in late 2022 has led to a revitalization of its economy, which is worth about $18 trillion, after experiencing the lowest growth rates in almost half a century. Analysts predict that momentum in the Chinese economy will increase in the coming months.

Data from China’s National Bureau of Statistics indicates that industrial output increased by 2.4% in January-February, compared to a year earlier, slightly less than the expected 2.6% increase in the Reuters poll. This still indicates a significant uptick from a previous increase of 1.3%. A yearly basis was recorded in December.

Retail sales increased by 3.5% in the first two months of the year compared to last year, indicating a turnaround from the 1.8% annual decrease recorded in December. This percentage aligns with analysts’ expectations and hopes that consumer spending will drive economic recovery at a time when weakening global demand is impacting China’s exports.

Investment in infrastructure increased by 9% on an annual basis in the first two months, driven by government spending aimed at supporting the economy. However, investment in the real estate sector remains down by 5.7%, reflecting caution among homebuyers and property developers.