China, about to announce the expected recovery of its economy

China will announce on Tuesday its first quarterly data on Gross Domestic Product (GDP) since the end of the sanitary restrictions against the covida figure that according to analysts should mark a rebound in the world’s second largest economy.

The Asian giant’s policy to contain the virus, with strict quarantines, massive tests and travel restrictions, severely limited economic activity, until the authorities abruptly abandoned it in December.

The figures to be released on Tuesday will give the first snapshot since 2019 of the chinese economy without the burden of sanitary restrictions.

Analysts consulted by AFP point to an average growth of 3.8% year-on-year between January and March.

However, the world’s second largest economy continues to face other crises, from real estate debt to weakening consumer confidence, global inflation and the threat of recession in other parts of the world.

“The recovery is real, but it is still in its initial phase”, says Larry Hu, chief economist for China of the investment bank Macquarie.

any rally “it will be gradual, largely due to weak confidence” of consumers, which in turn makes companies “reluctant” to hire more staff, he said.

The Chinese economy grew just 3% in all of last year, one of its worst results in decades.

In the first quarter of 2022, it registered an expansion of 4.8%, although growth dropped to only 2.9% in the last three months of the year.

– Real estate crisis –

The crisis in the real estate sector – which together with construction accounts for about a quarter of China’s GDP – continues “posing challenges to economic growth”according to Teeuwe Mevissen, an analyst at Rabobank.

He real estate it was one of the key drivers of China’s recovery after the initial wave of the pandemic in 2020, when Beijing managed to prevent the widespread spread of the coronavirus.

But since then weak demand has plagued a sector already affected by falling house prices and huge debt that has led some developers to fight for their survival.

In recent weeks the situation seems to have improved slightly and official aid helped to stabilize prices in March, according to figures from the National Statistics Office.

Economists will also be closely watching March retail trade data, the main indicator of household consumption, on Tuesday.

Retail sales picked up in January and February, after four successive months of contraction, according to official figures.

But almost 60% of urban households continue to give priority to saving over investment or spendingcompared to 45% before the pandemicaccording to a survey by the Chinese central bank.

Consumer confidence “remains in negative territory” despite the lifting of health restrictions, said Harry Murphy Cruise, a macroeconomist specializing in the Asia-Pacific region at the ratings agency. Moody’s.

“Households have a long memory and it will take time for them to forget the economic pain of recent years,” he told AFP.

– Global tensions –

Beijing has set itself a comparatively modest growth target of around 5% this year, a target that the country’s Prime Minister Li Qiang has already warned could be difficult to achieve.

An AFP survey of various analysts predicts that the Chinese economy will grow an average of 5.3% this year.

The figure roughly coincides with the forecast of the International Monetary Fund of 5.2%.

However, analysts warn that the global context could continue to hinder China’s recovery, particularly geopolitical tensions with the United States, the threat of recession in other major economies and galloping global inflation.