The Chinese economy grew 18.3% in the first three months of 2021, its fastest annual rate of any quarter, underscoring the strength of its recovery from the coronavirus pandemic.
The strong increase in gross domestic product was also helped by the weak performance of the economy during the same period a year ago, when China suffered from a contraction for the first time in decades.
The data highlighted the rapid pace of recovery in China, where a frenzy of industrial activity and low rates of Covid-19 infection have combined to spur growth. above prepandemic levels at the end of last year, and far beyond the performance of other major economies.
The figures, which nevertheless remained slightly below analysts’ expectations, were released as Xi Jinping’s administration prepares to mark the centenary of the founding of the Chinese Communist Party in July. As the celebrations approach, the party has repeatedly pointed to its successful containment of Covid-19 and the country’s strong economic recovery from the struggles of its Western rivals, particularly the United States.
“We are confident that the current trend of recovery will continue throughout the year,” Liu Aihua, a spokesperson for the National Bureau of Statistics, said at a briefing.
But the NBS also issued a note of caution: “We must be aware that the Covid-19 epidemic is still spreading globally and that the international landscape is complicated by strong uncertainties and instabilities.”
The sharp increase in the first quarter, which was much higher than in any period since the start of the quarterly reports in the early 1990s, was again supported by industrial production. The indicator added 24.5% in the first quarter and, alongside the boom in exports, helped support growth over the past year, although it fell short of expectations in March and failed. increased only 14.1% year over year.
The expansion was also supported by household consumption, which previously lagged behind the broader recovery, but is expected to play a bigger role driving growth this year. Retail sales beat expectations rising 34.2% in March, rebounding from a lockdown a year earlier.
Eswar Prasad, a Chinese financial expert at Cornell University, said that even after factoring in the “ghost effect” of last year’s low baseline comparison, the first quarter figure was “a clear confirmation Chinese resilience and momentum. economy”.
China has focused on monetary policy, with signs of overheating in parts of the economy despite continued weakness consumer price inflation. The government is trying to reduce leverage in its real estate sector, as well as curb record steel production rate following a construction boom.
Yue Su of the Economist Intelligence Unit said such concerns would lead the government to curb investment stimulus measures.
“Authorities are unlikely to rush approval of infrastructure investments in the second quarter, even if economic activity slows,” she said.
Prasad added: “The recovery will give the government more leeway to reduce stimulating macroeconomic policies and intensify [its] focus on financial risks. ”
Several senior officials have warned of the threat of high asset prices in recent months. Guo Shuqing, China’s main banking regulator, said in march that the country was exposed to “bubbles” in international markets and in its own real estate sector.
The Chinese stock market hit a absolute record in February, but has since lost 15 percent. Following the data release on Friday morning, the country’s CSI 300 index of stocks listed in Shanghai and Shenzhen remained stable.
China’s resumption of the pandemic has also helped it dominate global trade, with increased exports every month since June of last year. In March, exports rose 30.6 percent in dollars from the same month a year earlier.
Despite the year-over-year figures, officials and economists have issued a note of caution on some aspects of the recovery, as well as its pace from the previous quarter, against which it rose 0.6 %.
Liu, the spokesperson for the NBS, noted that investment in the manufacturing sector has not returned to its pre-pandemic level. “Factories face many difficulties in their operation,” Liu said.
Louis Kuijs, Head of Asian Economics at Oxford Economics, said: “Annual data doesn’t really tell us how the economy performed in the first quarter. . . in fact, this performance was a bit disappointing. The good thing is that March was better than the first two months. “
Capital investment increased 25.6% in the first quarter. The urban unemployment rate was 5.3%.
Additional reporting by Xinning Liu in Beijing and Tom Mitchell in Singapore
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