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China’s Year-on-Year Growth Hits Record but Quarterly Growth Slows

Economic IndicatorsApr 16, 2021 12:34AM ET
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By Gina Lee – China’s economy soared in the first quarter on a yearly basis. Consumer spending also strengthened, suggesting a more balanced recovery on a quarterly basis from the investment and export-fueled rebound from 2020’s COVID-19-induced lockdowns.

Economic data released earlier in the day said that the GDP for the first quarter grew a record 18.3% year-on-year and 0.6% quarter-on-quarter in March. Both were lower than the 19% and the 1.5% growth in forecasts prepared by

Yearly growth soared from the 6.5% growth recorded in the first quarter of 2020, although the figures were skewed by the comparison with those from 2020, when China imposed a strict lockdown as the COVID-19 pandemic spread.

The country’s economic recovery has progressed at a remarkable speed, with the losses from a recorded contraction in the first quarter of 2020 all but recovered by the end of September 2020. Strong industrial output and robust exports as COVID-19 fueled demand for Chinese-made medical goods and electronic devices also gave the recovery a leg up.

“We are seeing a bit more balanced recovery in the Chinese economy,” UBS AG chief China economist Wang Tao told Bloomberg.

As monetary and fiscal policy starts to normalize, property and infrastructure investment are set to slow in the next few quarters, “that early pickup in the construction industry is going to give way to more household consumption,” she added.

Meanwhile, the quarterly growth, a better reading of the economy’s momentum, was slower than the 2.6% growth recorded in the fourth quarter of 2020. Wang credited the slower growth to a fresh COVID-19 outbreak at the beginning of 2021, the subsequent travel restrictions over the Lunar New Year holiday in February and a lack of additional fiscal stimulus.

However, policymakers are wary of the increasing pace of economic recovery indicated by stellar yearly growth in GDP, which is also leading to rising inflation and soaring debt levels. The government has signaled a scale back in fiscal and monetary stimulus and is also tightening regulatory oversight in lending and real estate among other sectors.

Meanwhile, the unemployment rate stood at 5.3%, slightly down from the previous reading of 5.5%.

China’s Year-on-Year Growth Hits Record but Quarterly Growth Slows

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