The Chinese economy reported a 18.3 per cent growth in the first quarter compared to the same period a year ago – when the economy was severely battered by the covid-19 pandemic. This is the highest quarterly growth of the economy since 1992 when the country started to keep quarterly records of economic data.
However, the figures were lower than a 19 per cent growth that has been expected by economists in a Reuters poll. Further, analysts believe that this growth number is heavily skewed, and is less indicative of strong growth since the number compares to the huge drop in economic contraction in the same period last year. A nationwide lockdowns at the peak of its Covid-19 outbreak had resulted in a 6.8 per cent shrinking of the Chinese economy in the first quarter of 2020.
“The national economy made a good start,” said China’s National Bureau of Statistics, which released the first quarter data. “We must be aware that the Covid-19 epidemic is still spreading globally and the international landscape is complicated with high uncertainties and instabilities,” it however added.
While some of the other key data as disclosed by China’s statistics department also seem to indicate a continued rebound for the economy, the numbers should not be considered unusually strong because they are measured against very weak numbers of last year.
There was a 14.1 per cent rise in industrial output for March compared to a year ago while a 34.2 per cent year on year growth in retail sales was also reported for the same period.
It’s ironic that China’s economic boom has been announced just as its leader wrestles with the problem of climate change – which has been caused by economic growth over the decades. Historically, that growth has been almost completely fuelled by emissions from burning coal, gas and oil.
China has pledged to completely stop emission growth by 2030 and reach zero emissions by 2060.
“Promisingly, the monthly indicators suggest that industrial production, consumption and investment all gained pace in March on a sequential basis, following the weakness in the first two months,” said Louis Kuijs, head of Asia economics at research and consultancy firm Oxford Economics.
But with reduction in government fiscal and monetary support, a number of sectors will slow down, predicted some analysts.
Even though the current figures indicate that the economic recovery of the country is broad-based, there could have been “front-loading” into the first quarter of some production and export activity which could suggest that there could be slower growth in eth quarters ahead, said Yue Su, the Economist Intelligence Unit’s principal economist for China.
“Trade performance and domestic industrial activities for the rest of year might not be able to maintain such strong momentum, due to lack of measures to stimulate domestic economy,” she said.
Despite the apprehensions, the data clearly suggests continued economic momentum for China. The Chinese economy grew by a far smaller 0.6 per cent when the growth of the first quarter was compared to the growth in the last quarter of last year.
(Adapted from WSJ.com)