Regional growth in Q1 seen as reason for optimism, experts say

First-quarter economic growth across various regions in China posted a steady start to the year, showcasing the resilience and potential of the economy despite headwinds from resurgent domestic COVID-19 cases and mounting uncertainties, experts said on Tuesday.

Zhou Maohua, an analyst at China Everbright Bank, said the steady growth at the regional level in the first quarter suggests more balanced development, with central areas reporting the most robust performance.

As of Tuesday, 28 provinces, autonomous regions and municipalities reported positive first-quarter economic growth.

Among the 28 provincial-level regions, 21 outperformed China's overall first-quarter 4.8 percent GDP growth, while six regions including Guangdong and Jiangsu provinces and Shanghai reported growth rates well below the national average for the three-month period. Beijing, however, reported the same growth rate as the national level.

Jiangxi province led the rankings with its first-quarter economy growing 6.9 percent on a yearly basis, followed by 6.7 percent in both Fujian and Hubei provinces.

Guangdong, Jiangsu and Shandong provinces ranked the top 3 provinces in terms of GDP size. Guangdong's GDP, severely impacted by the resurgence of domestic COVID-19 cases, expanded 3.3 percent in the first quarter to 2.85 trillion yuan ($440 billion).

Noticeably, 11 regions recorded GDPs of over 1 trillion yuan in the first quarter, up from eight during the same period a year prior.

Dong Xiaoyu, a senior expert at Zhongguancun Development Group, said the steady first-quarter growth at regional levels laid a solid foundation for stabilizing overall growth in 2022.

Dong, who is also a researcher at the Capital Institute of Science and Technology Development Strategy, said China's second-quarter growth is likely to slow due to weakening economic activity in hard-hit regions such as Jilin province and Shanghai.

Dong said China could meet its annual growth target of around 5.5 percent if it is able to effectively control the pandemic in May, and he said he expects more steps to support struggling smaller enterprises such as further tax and fee reductions.

While Fujian and Shanxi provinces met their annual growth targets in the first quarter, other regions witnessed a gap between their first-quarter growth and their targets.

Zhou from China Everbright Bank said downward pressure from rising domestic COVID-19 cases since March severely suppressed domestic demand.

He warned that China is facing challenges and difficulties from domestic COVID-19 cases, volatility in the energy market and uncertainties in the external environment, which may cloud the outlook over the short term.

However, Zhou believes that with the help of effective government measures to prevent and control the pandemic and ease pressures on enterprises, China is capable of maintaining steady growth for the whole year and the economy is likely to recover in May and June.

Chen Jia, a researcher at the International Monetary Institute of the Renmin University of China, said he expects the government to take a series of measures to stabilize overall growth, with a key focus on stabilizing expectations, continuing to reduce fees and taxes and introducing supportive policies for resuming work and production.