The Facts
China's National Bureau of Statistics on Tuesday reported that the country's GDP grew by 4.5% in the first quarter. The growth is the highest since the first quarter of last year and beat expectations of a 4% rise. The economy expanded 2.2% quarter-on-quarter.
While this figure falls slightly short of Beijing's 5% growth target for this year, it indicates that the world's second-largest economy is picking up pace after zero-COVID measures were scrapped.
The Spin
Narrative A
For most of the past two decades, China has been the single largest engine of global growth. After experiencing one of its worst economic performances in years in 2022, it's recovering faster than expected, and Tuesday’s report on 4.5% GDP growth indicates that China — the world's second-largest economy — is coming back to life.
Narrative B
China is likely to see a powerful economic recovery, driven primarily by growth in its service industries. However, the rest of the world will not benefit much because China's rebound is focused more on domestic consumption than on exports as in previous cycles — the US economy in particular will likely not feel any positive effect at all. Instead, there is a high risk that China's reopening will add pressure on global energy prices and raise inflationary pressures.
