The Chinese yuan remained range-bound against the greenback Monday following the release of mixed economic data. While China’s GDP growth in the first quarter surpassed estimates, retail sales declined more than anticipated in the same period. There were no other major economic releases yesterday. Overall, the USD/CNY pair traded in a narrow range of between 6.3741 and 6.3779 in the last 24 hours.
According to the data published by China’s National Bureau of Statistics NBS), the country’s economy expanded by 4.80% y-o-y in the first quarter of 2022, following a 4% increase in the December 2021 quarter and greater than the 4.40% GDP growth anticipated by economists.
Also, China’s GDP grew by 1.30% q-o-q in March 2022 quarter, beating forecasts for a 0.60% increase and a 1.50% rise in the earlier quarter.
The country’s fixed-asset investment grew by 9.30% y-o-y in the first quarter of 2022, following a rise of 12.20% in the January-February period and greater than the 8.50% increase anticipated by economists.
Investment in manufacturing surged 15.60% y-o-y in the March 2022 quarter. Likewise, infrastructure posted a growth of 8.50% during the same period.
The NBS also stated that the industrial production increased 5% y-o-y in March, compared with a 7.50% growth in the January-February period and greater than the 4.50% growth anticipated by economists.
Furthermore, data published by the NBS indicates that retail sales declined by 3.50% y-o-y in March, following an increase of 6.70% in January-February and worse than the 1.60% decrease anticipated by economists.
Jewelry posted the steepest decline of 17.90% y-o-y in March. Likewise, catering recorded a drop of 16.40%, while clothing and shoes reported a 12.70% decrease.
Notably, retail sales posted a growth of 3.30% y-o-y in the March 2022 quarter, despite a drop in the sales of apparel, autos, and furniture during the period.
The jobless rate across 31 key Chinese cities increased to a new record high level of 6% in March, from 5.40% in February. Overall, China’s unemployment rate was 5.80% in March, reflecting the highest level since May 2020.
Real estate, which continues to face many problems since China tightened the screws on raising debt by developers, recorded a 0.70% y-o-y increase in investment in 1Q 2022.
Exports, unarguably the leading driver of the country’s growth – rose by a higher-than-anticipated 14.70% y-o-y in March. However, imports surprisingly declined by 0.10% during the same period. During the first quarter, exports accounted for 3.70% of GDP growth, compared with 26.50% in the earlier quarter, highlighting the weakness in the major growth constituent.
Also, home sales (in terms of value) plunged 26.20% y-o-y in March, mirroring the largest decline since January-February 2020.
With lockdowns enforced in business centers such as Shanghai, economists anticipate April data to be worse.
Last Friday, the People’s Bank of China (PBOC) announced a cut in the percentage of cash reserves that must be held by banks, paving the way for an increase in the liquidity of about 530 billion yuan (~$83.25 billion).
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