China Economic Quarterly Q1 2022

Q1 GDP grew by 4.8% over the relatively high base last year, while the country faces severe downward pressures in Q2 amid new COVID-19 outbreaks.

This issue provides an overview of the macroeconomic trends in Q1 2022, some policy updates and hot topic analysis.

Highlights

Here are some macro-economic highlights:

Total GDP reached 27 trillion yuan with growth of 4.8% in Q1
Total fixed asset investment reached 10.5 trillion yuan and increased by 9.3%
Total real estate investment went up 0.7% to reach 2.8 trillion yuan
PMI dropped to 49.5% in March
Industrial added values grew 6.5% in Q1
Total retail sales of consumer goods rose 3.3% to reach 10.8 trillion yuan in Q1
Imports and exports increased by 10.7% to reach 9.4 trillion yuan
PPI increased by 8.3% and CPI up 1.5% in March

Policy updates

Growth of aggregate financing to the real economy increased by 10.3% in Q1
According to People’s Bank of China (PBoC), in the first quarter, liquidity was reasonably abundant; the total financial volume increased steadily, while the comprehensive financing cost of enterprises decreased steadily.

Fiscal revenue increased by 8.6% while fiscal spending grew by 8.3%
In Q1, fiscal revenue remained steady with 8.6% YoY growth, mainly driven by economic recovery in the first two months and the increasing industrial producer prices. Meanwhile, the national public budget expenditure went up by 8.3%.

Hot topic analysis: Establishing an efficient, rule-based, fair and open unified market in China

At the end of March 2022, the Central Committee of the Communist Party of China (CPC) and the State Council jointly released a guideline on accelerating the construction of a unified national market. It is an important guideline aiming to comprehensively deepen the reform and opening-up of the country.

The key measures of the guideline include breaking down local protectionism and market segmentation, lifting the barriers restricting the economic cycle, and promoting the smooth flow of commodity, production factors and resources on a larger scale. The guidelines give full play to the rule of law to build a regulated, unified national market system.

Implications and opportunities

The key policy measures of the guideline include strengthening the coherence of basic market systems and rules across the country, promoting a high standard of connectivity between market facilities, creating a unified market for production factors and resources, promoting the high-level integration of the goods and services markets, promoting fair and unified market regulations, and regulating unfair market competition and market intervention.
The guideline lists the five major goals of a unified national market: Continue to boost the efficiency, connectivity and growth of the domestic market; Accelerate the building of a stable, fair, transparent and predictable business environment; Further reduce market transaction costs by removing institutional obstacles that hinder the market's allocation of various production factors and the circulation of goods and services; Promote scientific and technological innovation and industrial upgrade; Cultivate new advantages to enable international competition and cooperation.
Continuously increasing the efficiency and scale of the domestic market is the primary goal of building a unified market. The key to achieving this goal is to increase both household income and the supply of high-quality products and services.
Breaking down local protectionism and regional barriers are important steps in building a unified market.
Establishing a unified market would further improve market efficiency, labour productivity and income, which has become a major focus of China's institutional reform.

Find out more about hot topic analysis