First quarter (Q1) economic data, released on Monday 18 April by the National Bureau of Statistics, paints a complex picture of China’s economy.
Overall growth of 4.8% year-on-year beat expectations thanks to a strong performance in January and February. But in March there were troubles, especially in retail and job figures, as the impact of the Ukraine war and domestic lockdown measures began to be felt.
Energy security concerns are apparent in the stats, with domestic coal production growing 10% compared to Q1 last year, to reach record levels. This rise is to compensate for reduced imports, and to fill the depleted stockpiles that caused power shortages last autumn. Analyst Lauri Myllyvirta puts most of it down to a spike in January.
On 20 April, the State Council further emphasised domestic coal production, instructing a further 300 million tonnes of mining capacity to be made available this year.
Domestic oil and gas production saw moderate Q1 growth of 4.4% and 6.6%, respectively.
On the renewable generation front, solar and hydro saw the best figures. Wind generation grew just 3.3%, but in March jumped 23.8% year-on-year. Fossil fuel generation saw 1.3% growth this quarter and in March actually declined 6% year-on-year. The growth in renewables generation is indicative of China’s ongoing energy transition.
There was a continued decline in heavy industry output. This was off the back of record levels in Q1 last year followed by a rapid cooling in the second half of 2021. Pig iron, crude steel and cement saw double digit Q1 contractions in output compared to the same period last year. Production may well pick up in the coming months, however, with government data indicating a 9.3% growth in fixed asset investment, a precursor to infrastructure and property construction.
New energy vehicle production held up well in Q1 (140.8% growth) despite waves of pandemic lockdowns across the country. SUVs, meanwhile, saw growth of 11%.
While overall production levels look strong through Q1, April has seen far more extensive and thorough lockdowns, particularly around Shanghai and its neighbouring manufacturing regions. These are expected to have a large impact on both production and consumption. Data for Q2 may tell a very different story on the state of China’s economy.