Rebound or downturn?: China to release key economic data on Tuesday

All eyes will be on China when it releases its latest economic data on Tuesday.

Many China watchers feel that the monthly data is likely to show China's economy doing a lot better than in reality.

Industrial output and retail sales are likely to have grown rapidly in April compared to the same period last year. This is because of the rebound in demand and recovery of supply chains after Covid restrictions were lifted in late 2022.

Add WION as a Preferred Source

But the world must take the data with a major caveat -- the low base effect. Many analysts believe that comparing the upcoming data with last year won't be the right thing to do.

“China’s April activity data will probably offer another instance of headline figures that can’t be taken at face value," Bloomberg quoted economists Chang Shu and David Qu as saying.

It is to be noted that China's economy slowed down significantly last year after the government imposed strict Covid-19 restrictions, especially in Shanghai - the commercial hub of China.

In 2022, China grew by just 3 percent, the lowest rate in nearly 40 years.

Instead, analysts are likely to compare the April data with the previous months of 2023 for a better perspective.

Recent figures have shown that all is not well in China.

Cooling of demand is clearly visible in China, as consumer prices barely grew last month. At 0.1 percent year-on-year growth, inflation rate in April 2023 was the slowest since 2021.

Housing market sales have starting to fizzle after housing sales and prices recovered briefly following a 18-month-long slump, as per a Bloomberg report. Notably, the property sector is crucial for China's economy as it accounts for one-fifth of the Gross Domestic Product.

Imports and exports, too, have slowed down amid a global downturn.

China's exports in March grew by 14.8 percent year-on-year, but slowed down to 8.5 percent in April. On the other hand, China's imports shrunk 1.4 percent (year-on-year) in March. The overall fall in imports widening to 7.9 percent in April.

Now, only time will tell if China can lead the global growth this year as the International Monetary Fund projects.

(With agency inputs)