China’s GDP grew 18.3 percent year-on-year in the first quarter of 2021, the fastest in three decades since the data was released, with key economic indicators all expanding at over 20 percent, setting an encouraging start for the whole year that is buoyed by a low base, soaring overseas demand and rebounding consumption at home.
The stellar data offers a glimpse into the strength of China’s economic recovery , which has been retaking lost ground since the second half of 2020. The country is likely to record the highest growth rate among major economies and make the greatest contribution to the global economy in the first quarter, on top of the US, analysts noted.
Looking ahead, China’s economy is forecasted to keep a stable growth, but it may enter “unchartered waters” in the second half of the year as geopolitical tensions keep developing and the marginal effect of global economic recovery has weakened.
Some analysts are upbeat about China’s GDP which might gain by a double-digit growth in the second quarter. For the whole year, the growth rate could reach 9 percent, analysts said, well above the government-set goal of above 6 percent.
In the first three months, China’s GDP grew 18.3 percent to 24.9 trillion yuan（$3.82 trillion), compared with a 6.8-percent contraction in the same period last year when the economy came to a standstill amid coronavirus lockdown.
Social retails soared 33.9 percent, fixed-asset investment jumped 25.6 percent, and industrial production gained by over 24.5 percent, data released by the National Bureau of Statistic showed on Friday.
Industry observers said the data underscores a broadened recovery momentum, particularly in March which marks a watershed in consumption from “divergent recovery” to “going full swing.”
“Millions of Chinese stayed at their working cities during the Spring Festival holidays, coupled with the resurgence of sporadic coronavirus cases, which curbed consumption to some extent in the first two months. With the rollout of vaccination plan across the country, there is a turnaround in March,” Lian Ping, head of the Zhixin Investment Research Institute, told the Global Times.
Analysts also highlighted the role of flooding overseas orders in shoring up China’s industrial production acceleration in the first three months.
“The global economy seems to be walking out of the pandemic-induced recession, which will boost foreign demands for Chinese merchandises till at least June. This stays in contrast to last year, when the recovery of the supply side outpaced that of the demand side,” Tian Yun, vice director of the Beijing Economic Operation Association, told the Global Times.
Building on the momentum, China will continue to make the biggest contribution to the global economy, serving as an engine of growth for the world. Its gap with the US – the world’s largest economy – is expected to further narrow, according to Tian, who expected China’s economic scale to overtake that of the US in a decade and usher in a new world economic landscape.
In 2020, China’s economic volume represented about 70 percent of that of the US.
But analysts noted that while China’s industrial production has been back to the right track, the growth of fixed-investment and consumption have yet to bounce back to pre-virus level despite a dramatic improvement from last year.
“With three minor vacations in the second quarter and consumers’ confidence being improved, consumption will continue to gain steam in the April-June period,” Lian added.
Lian noted that as global supply ability gradually resumed this year, some China-bound commodity orders may experience a withdrawal, or to be diverted to other emerging economies, which may impact manufacturing activity.
“The growth rates of GDP may come down quarter by quarter in 2021, due to base variation and replacement effect, but it is highly likely that the annual growth rate will be over 10 percent as demands at home keep booming,” Tian said.
In the fourth quarter of 2020, China’s GDP grew 6.5 percent year-on-year. For the whole of 2020, its economy expanded by 2.3 percent, the only major economy to achieve a positive growth last year.