CHINESE GDP EXPANDS BY RECORD 18% IN FIRST QUARTER
▶ Industrial output and household consumption drive sharp growth
China’s economy expanded by a record 18.3 per cent in the first three months of this year as industrial production and household consumption grew, compared with the same period a year ago when coronavirus restrictions were at their peak.
Gross domestic product surged to 24.9 trillion yuan ($3.82tn) during the period, up 0.6 per cent from the fourth quarter of 2020, China’s National Bureau of Statistics said.
The economy grew by 6.5 per cent in the last quarter of 2020.
“Generally speaking, the national economy in the first quarter presented continued momentum of stable recovery,” the bureau said on Friday.
“However, we must be aware that the Covid-19 epidemic is still spreading globally, and the international landscape is complicated with high uncertainties and instabilities.”
China is set to overtake the US to become the world’s biggest economy in 2028, five years earlier than expected, as it recovers quicker from the coronavirus pandemic, according to the Centre for Economics and Business Research.
The economy is expected to grow by an average of 5.7 per cent a year from 2021 to 2025 before slowing to 4.5 per cent a year from 2026 to 2030, according to the CEBR.
China was the first country to report Covid-19 infections in December 2019.
However, strict movement restrictions helped it to contain the outbreak while vaccinations and the easing of lockdown measures hastened its recovery.
The Chinese economy is expected to grow by 8.2 per cent this year. Growth fell from 5.8 per cent in 2019 to 2.3 per cent last year, according to the International Monetary Fund.
“There is nothing more promising than seeing China in good health for the average investor. No wonder we have seen oil extending gains above the 50-day moving average,” said Ipek Ozkardeskaya, a senior analyst at Swissquote.
The first-quarter data underscores the rapid pace of recovery
in China, supported by new industrial activity and low Covid-19 infection rates.
China had 90,483 infections and 4,636 deaths as of yesterday, according to Worldometer. Total recoveries stood at 85,538.
The sharp jump in growth in the first three months of the year was supported by industrial production, which grew by 24.5 per cent.
At a sector level, manufacturing grew by 27.3 per cent from a year ago, mining production by 10.1 per cent and the production and supply of electricity, thermal power, gas and water by 15.9 per cent, according to the country’s statistics bureau.
China’s purchasing managers’ index for the manufacturing sector stood at 51.9 per
cent last month, staying above the neutral 50 threshold for 13 months in a row.
“The foundation for domestic economic recovery is yet to be consolidated and the longstanding structural problems remain prominent with new situations and issues arising from development,” the bureau said.
“We should maintain the consistency, stability and sustainability of macro policies, deepen the reform and opening up and innovation, keep the economy performing within a reasonable range and promote the quality development of the economy in a solid way.”
The number of jobs created during the three-month period was 2.97 million while per capita disposable income rose by 13.7 per cent. The urban unemployment
rate was 5.3 per cent in March.
The GDP expansion was strongly supported by household consumption, with retail sales of consumer goods in China during the three-month period growing by 33.9 per cent from a year ago while online retail sales were up 29.9 per cent.
Despite this, consumer prices remained stable. Core consumer price inflation, excluding the price of food and energy, remained flat during the period.
“China not only has controlled coronavirus to a much better degree as compared to the US or Europe, but the economic growth has been enormously impressive,” said Naeem Aslam, chief market analyst at brokerage Avatrade.
“It is not only the GDP growth number that has stolen all the headlines. If we look at the retail sales number, which we consider as a pure naked form of consumer confidence, they are not short of any thunder either.”
Fixed-asset investment rose by 25.6 per cent during the period while infrastructure investment, manufacturing spending and property development grew by 29.7 per cent, 29.8 per cent and 25.6 per cent, respectively, from a year ago.
The total value of Chinese imports and exports of goods grew by 29.2 per cent from a year ago during the first quarter.
The value of exports was up by 38.7 per cent from a year ago while imports rose by 19.3 per cent, the bureau said.