The first quarter of this year saw China’s economy growing by an unprecedented 18.3% compared to the first quarter of last year.
This is the biggest growth in China’s GDP since it began keeping quarterly records in the early nineties. The figures still did not match analyst expectations though, with a recent Reuters poll had economists expecting a 19% growth. Also to be considered is that the figures are compared against last year’s quarter. In the comparative quarter China’s economy had shrunk by 6.8% as global lockdowns and restrictions took effect.
China’s National Bureau of Statistics, who released the figures said – “The national economy made a good start. But we must be aware that the Covid-19 epidemic is still spreading globally and the international landscape is complicated with high uncertainties and instabilities.”
Other key statistics released by the department also point to a continuing recovery. Retail sales grew by 34.2% and Industrial output rose by 14.1%. However, these are again compared to last year’s figures, where both sectors had shrunk dramatically.
Manufacturing, consumer spending, and auto sales have all recovered to pre-pandemic levels.
Louis Kuijs, head of Asia economics for consultancy firm Oxford Economics said that – “Promisingly, the monthly indicators suggest that industrial production, consumption, and investment all gained pace in March on a sequential basis, following the weakness in the first two months.”
The acceleration that these figures showed in the last month of the quarter is unlikely to be sustained according to some analysts. The Chinese Government has poured financial support into the economy to help kick-start it as the world emerged from the pandemic.
As this support is reduced the rate of growth is likely to slow, according to Yue Su, the Economist Intelligence Unit’s principal economist for China. She said that while the figures show a broad-based recovery, some export and production activity is likely to have been front-loaded into the first quarter. This, she says, suggests that slower growth figures are to be expected in the coming months.
She added that – “Trade performance and domestic industrial activities for the rest of the year might not be able to maintain such strong momentum, due to lack of measures to stimulate the domestic economy.”
There are also fears that China’s property market is overheated and that continuing tensions with the U.S. may yet affect the future growth figures. President Joe Biden has already made it clear that he is likely to continue the hard-line approach with China that the previous administration had set on course.
China has set an overall growth target of 6% for this year and these figures suggest that this is achievable even with the reduction in emergency relief for businesses that the Chinese Government had put in place.
In 2020, China was the only one of the world’s major economies to register any growth for the year. Although it was its poorest set of figures for decades with a total growth of just 2.3%.