China's economy gathers steam for faster recovery amid pro-growth policies

This photo taken on Nov. 4, 2022 shows an evening view of the Lujiazui area in east China's Shanghai. (Xinhua/Wang Xiang)

BEIJING, April 19 (Xinhua) -- Chinese economy is expected to recover at a faster pace after making a good start in 2023 as growth momentum is building up on the government's pro-growth measures ranging from expanding domestic demand to attracting foreign investment.

Despite weakening global growth and persistently high inflation in major economies, China's gross domestic product (GDP) grew by 4.5 percent year on year in the first three months, shining as a bright spot in the economic landscape.

An increasing number of positive factors are contributing to the overall improvement in economic operation, Meng Wei, spokesperson for the National Development and Reform Commission, told a press conference on Wednesday, adding that domestic demand is gradually expanding, production and supply are recovering at a faster pace, and public expectations are notably improving.

Looking ahead, growth in the second quarter is likely to be significantly faster than in the first quarter, said Fu Linghui, spokesperson with the National Bureau of Statistics (NBS).

China will introduce pragmatic and effective measures in a due course to bolster the growth momentum and promote sustained economic recovery, according to Meng.

The higher-than-expected growth rate in the first quarter was partly driven by a rebound in consumption, as people flocked to shopping malls and restaurants.

NBS data showed that China's retail sales gained momentum in Q1, up 5.8 percent year on year. Final consumption contributed 66.6 percent to overall GDP growth in Q1.

China is drawing up related documents with a focus on stabilizing bulk consumption, improving services consumption, and expanding consumption in rural areas to bolster the recovery trend, Meng said.

To stimulate auto consumption, the country will expedite the building of battery charging facilities and parking facilities in cities, and promote new energy vehicles in rural areas.

As part of efforts to promote high-level opening up, China will appropriately shorten the negative list for foreign investment, Meng added.

She indicated that the government is committed to adopting more measures to actively leverage foreign investment, adding that policies designed to channel more foreign investment towards advanced manufacturing, high-end technologies, and modern services, as well as to the central, western, and northeastern regions of the country, will be fully executed.

Efforts will also be made to encourage more private capital to participate in the construction of major national projects, and step up credit support for private investment projects in accordance with market principles, Meng said.

Chinese authorities, including the People's Bank of China, have also taken steps to stimulate growth. In a statement released last Friday, the central bank said it will make every effort to stabilize growth, employment and prices, and expand domestic demand.

Priority will be given to infrastructure construction, and support will be provided for key sectors and weak links of the economy, such as inclusive finance, green development and sci-tech innovation, the central bank added.

On the fiscal front, government spending rose 6.8 percent year on year to hit 6.79 trillion yuan (about 987.9 billion U.S. dollars) in the first quarter, according to the Ministry of Finance.

Since the beginning of this year, the central government has maintained a relatively high expenditure intensity and continued to improve the effectiveness of the fiscal policy, said the ministry, adding that it will make solid efforts to cut taxes and fees so that policy dividends can benefit business entities more.

As the economic recovery gains traction, investment banks and international organizations have upgraded China's growth forecasts for this year.

JPMorgan raised its 2023 growth outlook to 6.4 percent, up from a previous forecast of 6 percent, saying that the latest quarterly report points to further growth ahead.

Citi raised its forecast to 6.1 percent from its previous forecast of 5.7 percent, stating that the Chinese economy is well on track for its post-COVID recovery led by consumption and services.

The International Monetary Fund said in its latest report on Tuesday that China will be the top contributor to global growth over the next five years, with its share set to be double that of the United States.