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China GDP grows record 18.3% in first quarter in COVID-19 rebound

China GDP grows record 18.3% in first quarter in COVID-19 rebound

A woman walks in a retail district in Beijing on Apr 15, 2021. (Photo: AP Photo/Ng Han Guan)

BEIJING: China's economy expanded at its fastest pace in record in the first quarter, data showed on Friday (Apr 16), in a sharp turnaround from its historic contraction caused by the COVID-19 outbreak.

The world's second-largest economy was the only major one to grow at all in 2020, supported by industrial activity and better-than-expected exports as the virus hit markets around the world.

It marks the fastest pace since quarterly records began three decades ago, though the GDP figure of 18.3 per cent is slightly below forecasts in an AFP survey of economists.

While the disease first emerged in central China in late 2019, the country was also the quickest to bounce back after authorities imposed strict control measures and consumers stayed home.

"The national economy made a good start," National Bureau of Statistics spokeswoman Liu Aihua told reporters on Friday.

The sharp spike was partly due to "incomparable factors such as the low base figure of last year and increase of working days due to staff staying put" during the Chinese New Year holiday, said Liu.

READ: China exports rise at robust pace in March, imports growth highest in 4 years

Migrant workers had been urged to remain in the areas where they work during their break owing to fears that the annual massive migration might lead to local outbreaks.

But Liu added that quarter-on-quarter growth has "demonstrated a steady recovery".

Across key sectors, China powered on in its economic rebound after caution around the holiday period subsided and domestic consumption soared.

In March, the country's industrial output rose 14.1 per cent on-year, bringing first quarter growth to 24.5 per cent, the official data showed.

Retail sales surged 34.2 per cent, picking up from the first two months and bringing first-quarter growth to 33.9 per cent as life largely returned to normal.

READ: China's consumer and factory prices rise in March

Liu, however, warned that the international landscape still contained "high uncertainties".

In March, the urban unemployment rate ticked down slightly to 5.3 per cent, a figure analysts are watching closely with China's consumption rebound behind that of its industrial sectors.

"The recovery remains uneven, with private consumption lagging given rising unemployment," HSBC chief China economist Qu Hongbin said in a recent report.

RETAIL PERFORMANCE

But economists expect growth drivers could change in the months ahead.

"Industrial production has been taking the lead in recovery last year, and it looks a bit tired now," said UOB economist Ho Woei Chen, referring to its slower-than-expected growth.

"There is expectation that with retail sales' outperformance and a recovering job market, that there is momentum picking up in private consumption," she told AFP, adding that this should take over the lead in growth later in the year.

But Oxford Economics' head of Asia economics Louis Kuijs cautioned that "a full rebound in household spending hinges on convincing vaccination and further improvements in labour market conditions".

Economists also added that China's post-coronavirus rebound is levelling off.

Julian Evans-Pritchard, senior China economist at Capital Economics, said: "We expect quarter-on-quarter growth to remain modest during the rest of this year as the recent boom in construction and exports unwinds, pulling activity back towards trend."

Source: AFP/ga

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