China’s Economy Bounces Back From Pandemic Hit With Record Q1

GDP growth of 18.3% year-on-year in the first quarter was the strongest since China began keeping records in 1992, and was driven by a surge in retail sales, industrial production, and investment in fixed assets.

The big jump reflects the deep slump in activity in early 2020 but it keeps China on track for growth of between 8% and 9% in 2021, economists said, far ahead of the Chinese government’s official target of more than 6%.

“We are fully confident that we can maintain the current recovery momentum throughout the year,” said Liu Aihua, a spokeswoman for the National Bureau of Statistics at a press conference in Beijing on Friday.

First-quarter retail sales jumped 34% from a year ago, while fixed-asset investment in urban areas gained nearly 26%. Industrial production increased by more than 24%.

“Growth remains pretty strong at this stage as Covid losers such as consumption and [capital expenditures] are catching up,” said Larry Hu, chief China economist for Macquarie Group, in a research report on Friday.

Retail sales, which took a big hit last year because of the lockdown, had improved because Beijing eased travel restrictions after the Lunar New Year holidays in February, he added. Investments in manufacturing and infrastructure also picked up the pace.

Trade also provided a strong boost. Customs statistics released earlier this week showed imports jumped more than 38% last month in US dollar terms compared to a year earlier, a sign that demand within China is picking up. Exports grew by nearly 31%.

Hu said the strength in imports was broad-based, indicating a “consumption recovery.” And Beijing should easily hit its target of more than 6% growth for 2021. “Growth could easily go to 8–9% with the low base,” Hu added.

Nomura analysts predicted Friday that China’s GDP would grow 8.9% in 2021.

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