China's GDP Exceeds Expectations, Retail Sales Collapses

China's GDP data grew beyond expectations in the first quarter of 2022. On the other hand, the latest retail sales report actually fell from the previous month's surge.

On Monday (18/April), China's Bureau of Statistics released GDP data which increased by 4.8 percent on an annual basis (Year-over-Year) in the first quarter of 2022. This figure rose quite dramatically from the 4.0 percent growth in the previous quarter, while exceeding economists' expectations for a mere 4.4 percent increase.

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China's GDP data this morning is quite surprising. This is because the economy is facing various obstacles both domestically and abroad. "The situation at home and abroad is becoming increasingly complicated and China's economy is facing significant obstacles and challenges," the NBS said in a statement.

The Chinese government itself has set an economic growth target of around 5.5 percent for 2022. This annual economic growth projection is much lower than last year due to various problems such as unsmooth supply chains, the latest COVID case in Shanghai, to the Russia-Ukraine conflict which has made energy prices soar.

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Retail Sales Plumped After a Rapid Rise

Separately, retail sales reported slumping 3.5 percent on an annual basis in March. This figure is worse than the 1.6 percent decline forecast, and in stark contrast to last month's performance which recorded an increase of up to 6.7 percent.

The decline in retail sales in March was allegedly related to a correction from the previous surge, given that people tend to hold back their spending after spending a lot.

Meanwhile, factory output rose 5 percent on an annual basis in March, down from a 7.5 percent increase in the previous period, but still beating expectations of a 4.5 percent increase. Fixed asset investment data (Fixed Asset Investment) has also increased 9.3 percent year-to-date.

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Amid labor market headwinds, China's unemployment rate increased 0.3 percent to 5.8 percent in March. Previously, the Chinese government had raised its projected unemployment rate this year from 5.1 percent to 5.5 percent.