At the beginning of 2022, although China's economy was plagued by adverse factors such as the resurgence of covid-19 epidemic in many cities, the continuation of supply chain crisis and the rise of geopolitical risks, the economy still achieved a stable start in the first quarter. China's gross domestic product (GDP) increased by 4.8% year-on-year (1.3% month on month), higher than the market expectation of 4.2% and 4% in the fourth quarter of 2021. In the first quarter, the main economic indicators showed different performances. The growth of industrial added value, total retail sales of social consumer goods, real estate investment and foreign trade slowed down to varying degrees, while the growth rate of fixed asset investment continued to rise. The rate of new employment also slowed down. The urban survey unemployment rate rose to 5.8% in March from 5.5% in February, reflecting signs of deterioration in the manufacturing and service job markets. In general, the uncertainty and challenges of the global economic recovery environment are increasing, and it is not easy for China to maintain a moderate economic recovery. China is a major importer of oil, natural gas, wheat and other bulk commodities. The current conflict between Russia and Ukraine has led to a surge in global energy and food prices. Coupled with the resurgence of covid-19 epidemic and other factors, China's economic growth faces greater resistance. In addition, the market expects that the Federal Reserve will further raise interest rates in the coming months. At the same time, the intensification of geopolitical risks will lead to slower economic growth and increased uncertainty. These shocks will endanger China's export demand and weaken China's economic growth momentum. Looking ahead, considering the increasing risk factors, although China's economy will continue to move towards normalization, the road will inevitably be tortuous and turbulent. The Chinese authorities still take the pursuit of high-quality and stable growth as the primary goal. Therefore, maintaining a loose economic policy environment will help to reduce the negative effects of various risk factors. The timely implementation of a series of measures such as expanding fiscal expenditure, reducing taxes and fees and ensuring liquidity will help to promote economic development and employment growth. In the second quarter, China's economy will face a slowdown due to the resurgence of the epidemic. However, moderate policy support, along with the sustained growth of consumption and investment sectors, is expected to help to promote macroeconomic development, mitigate the risk of economic downturn, and ensure the stable operation of the economy and sustainable recovery of economic strength. We believe that China's economy will grow at a medium rate in 2022, and economic development will pay more attention to expanding domestic demand and cultivating technological innovation. It is expected that China's GDP will grow by 5.5% year-on-year in 2022.
In the first quarter, the rising momentum of fixed asset investment remained strong. In the first quarter of this year, the national fixed asset investment increased by 9.3% year-on-year, higher than the market expectation of 8.4% and 4.9% in 2021. The sustained growth of fixed asset investment continued to benefit from infrastructure investment (an increase of 8.5% in the first quarter and 0.4% in 2021) and manufacturing investment (an increase of 15.6% in the first quarter and 13.5% in 2021). However, real estate investment remains sluggish, with a year-on-year growth rate of only 0.7% in the first quarter, far less than the 4.4% growth rate in 2021, reflecting that the debt problem of real estate developers has not been solved and the liquidity continues to be tight. We believe that the state has issued a series of positive fiscal policies to support the development of infrastructure projects, increase investment in high-tech industries and encourage factories to upgrade and transform equipment. These measures will further stabilize the current growth trend of fixed asset investment and provide strong support for China's sustained and steady economic recovery.
