China’s economy grew faster than expected in the first quarter but official data revealed a contraction in consumer activity as lockdown measures to counter the spread of Covid-19 weighed on the country’s outlook.
China’s gross domestic product rose 4.8 per cent compared with the same period a year earlier, after expanding 4 per cent in the final three months of 2021. On a quarter-on-quarter basis, GDP grew 1.3 per cent.
Retail sales, a gauge of consumer spending, fell 3.5 per cent in March — its first contraction since July 2020 — as authorities hardened restrictions to counter the country’s worst coronavirus outbreak in more than two years.
The data will add to pressure on the government of Chinese president Xi Jinping, which has reaffirmed its commitment to a zero-Covid policy despite mounting costs and disruptions in the country’s biggest cities. Infections across China rose in April and Shanghai, its main financial hub, has remained largely sealed off.
Fu Linghui, a spokesperson for the National Bureau of Statistics, said “the operation of the economy was generally stable” but pointed to “frequent outbreaks” of Covid-19 and an “increasingly grave and complex international environment”.
The lockdown effect: The lockdown in Shanghai began in late March, meaning its full impact will not be recorded in the first quarter report, which did take into account less severe lockdowns in the manufacturing hubs Shenzhen and Jilin.
Wealthy seek to leave: Chinese immigration consultants say inquiries from wealthy individuals trying to leave have surged following the lockdown of Shanghai, underscoring frustration with Beijing’s zero-Covid strategy.
Thanks for reading FirstFT Americas. Here’s the rest of the day’s news.
The latest from the war in Ukraine
Russian missile strikes leave six dead: Ukrainian officials said that six people including a child were killed in strikes on Lviv — which has been a haven for people fleeing the war from other parts of the country — this morning.
Religion: The Russian Orthodox Church, one of the pillars of Vladimir Putin’s rule, has given the invasion an air of legitimacy, bolstering his depiction of the war as a sort of reunion of ancient Slavic-Orthodox lands.
Cyprus: Long known as “Moscow on the Med”, the country has some of the closest political ties to Russia of any EU member state but is trying to preserve the bloc’s unity towards Moscow.
Five more stories in the news
1. Global economy under threat The twin perils of slowing growth and high inflation, or stagflation, will hit the global economy this year as Russia’s war against Ukraine exacerbates a slowdown in the recovery from the coronavirus pandemic, according to Financial Times research.
2. US natural gas export fever tempered by costs and climate concerns Europe’s goal to cut dependence on Russian natural gas in response to the Ukraine war should mean a bonanza for LNG export companies in the US. However, prospects for more than a dozen new American liquefaction projects remain highly uncertain as construction costs rise, the US gas price soars and climate policymakers pursue a long-term shift away from fossil fuels, as our energy expert Derek Brower explains.
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3. Mexican president’s radical energy reform defeated in congress Staying with energy, Mexico’s opposition politicians have denied the president the two-thirds majority he needed to change the constitution and implement a radical energy reform bill. The reform would have guaranteed state electricity group CFE 54 per cent of the market, and aimed to transform the regulatory landscape for electricity, including cancelling power generation permits and prioritising CFE power over private renewables on the grid.
4. Donald Trump’s political machine slows its spending Spending slowed compared with 2021, as fundraising ebbed slightly and the former president turned to high-profile endorsements to influence this year’s midterm elections. According to an FT analysis of federal campaign finance filings, the former president still has a formidable $146mn war chest to deploy in order to bolster Republican candidates who have embraced his political agenda.
5. Boris Johnson to discuss security co-operation with Narendra Modi The UK prime minister and his Indian counterpart will meet in New Delhi later this week, and discuss strengthening security co-operation between India and the UK in the Indo-Pacific region as well as strategic defence in light of increasing Russian aggression. India has maintained a strategically neutral stance on Russia, which has been met with frustration by some western allies including the US president.
Fertility returns: The number of births in advanced economies has largely rebounded to pre-pandemic levels, an FT analysis shows — a recovery partly due to stimulus policies.
The FT View: China’s zero-Covid policy has taught the world that it is no longer possible, if it ever was, to combat the virus with suppression alone. Ways to live with the virus must be found, our editorial board writes.
The day ahead
US housing The NAHB/Wells Fargo Housing Market Index for March is released today. The index is a weighted average of present single-family sales, single-family sales for the next six months and traffic of prospective buyers.
Bank of America The US bank releases its first-quarter results today.
Boston Marathon The world’s oldest annual marathon takes place in Boston for the 126th time.
Join us for the FT’s Crypto and Digital Assets summit on April 26-27. Register today to be part of a critical conversation with the world’s global financial and corporate elite, as they carve out the path ahead for bridging traditional finance and the crypto leaders of tomorrow.
What else we’re reading
Asian Americans take safety into their own hands after violent attacks Since the pandemic, anti-Asian hate in the US has escalated. Amanda Chu speaks to Asian Americans in New York City, where the police department estimates that hate crimes against them jumped more than 360 per cent in 2021.
Donald Trump and the Republicans’ midterm dilemma The Republican Senate primary in Pennsylvania next month is becoming a pivotal event in this year’s midterm elections, and could determine which party controls the upper chamber of Congress. US president Joe Biden defeated Donald Trump in 2020 in the state, but only by a razor-thin margin.
‘Destructive hunger’: South America’s farmers seek to head off global food crisis: The food crisis which looks likely to result from the war in Ukraine is being felt across the world including Brazil and Argentina, major sources of everything from soy and beef to maize and oranges. Many agricultural enterprises in the region are in line for a windfall from higher commodity prices, but elevated costs or looming scarcity of crucial inputs — such as fuel, fertilisers and animal feed — risk dragging on their ability to help guarantee global food security.
Safe assets and political risk Economists’ definitions of safe assets — those that serve as a bolt hole in crises — are often devoid of political content, says John Plender. But safe assets, like reserve currencies and financial centres, have largely lost their pre-eminent status thanks to war.
It’s time for a new Bretton Woods “This isn’t America Alone or even America First”, writes Rana Foroohar, “But it does acknowledge the existence of a political economy in which free trade can only really be free if countries are operating with shared values, and an even playing field.”
Bennifer: The rematch
Twenty years, three marriages, five children, a Las Vegas residency, more than 18 fragrance launches, some box office flops and an Academy Award since their first engagement, Bennifer — the relationship between Ben Affleck and Jennifer Lopez — has been born anew for 2022. But does getting back together mean happy ever after, ponders Jo Ellison.