China’s economy grew a record 18.3% in the first quarter of 2021 compared to the same quarter last year.
It’s the biggest jump in gross domestic product (GDP) since China started keeping quarterly records in 1992. However, Friday’s figures are below expectations, with a Reuters poll of economists predicting 19% growth. They are also heavily skewed, and less indicative of strong growth, as they are compared to last year’s huge economic contraction.
As a baseline, they use the first quarter of 2020, when China’s economy shrank 6.8% due to nationwide lockdowns at the peak of its Covid-19 outbreak. Other key figures released by China’s statistics department also point to a continuing rebound, but are also unusually strong because they are compared against extremely weak numbers from last year.
Industrial output for March rose 14.1% over a year ago, while retail sales grew 34.2%.
“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,” said Lousi Kuijs from Oxford economics.
It’s not all good news for China’s economy, with analysts predicting some sectors will slow as the government’s fiscal and monetary stimulus measures are reduced.
Yue Su, from the Economist Intelligence Unit, said that while the latest figures show that China’s economic recovery is broad-based, some production and export activity could have been “front-loaded” into the first quarter, suggesting slower growth ahead.
“Trade performance and domestic industrial activities for the rest of year might not be able to maintain such strong momentum, due to lack of measures to stimulate domestic economy,” she said.
The figures nevertheless suggest China has continued to gain economic momentum, after posting 6.5% economic growth in the last quarter of 2020.
Helped by strict virus containment measures and emergency relief for businesses, the economy has recovered steadily since the pandemic hit. Despite a calamitous start to the year, China was the only major economy to register growth in 2020.
Nevertheless, the world’s second largest economy only managed 2.3% growth, its weakest result in decades. China has set an economic growth target of 6% for 2021, after scrapping its target last year. Despite its rebound, the Covid-19 is still casting a shadow over China’s economy.