But quarterly comparisons show slowing momentum, with analysts forecasting the construction and export industries slowing down.
The Chinese economy achieved record growth in the first quarter compared to the same period last year, when the country was in a period of strong embargo to control the spread of the coronavirus.
But compared to the last quarter of 2020, growth slowed down, official figures show, questioning the strength of the recovery for the rest of the year.
Gross domestic product (GDP) increased 18.3% in the first three months of 2021 compared to the same period last year, according to data from the National Bureau of Statistics. This is slower than economists’ forecast of 19% growth in a poll conducted by Reuters and 18.5% by Bloomberg.
On a quarterly basis, GDP grew 0.6% in the first three months, slower than the adjusted 3.2% increase recorded in the previous three-month period and also well below analysts’ forecasts. .
“China’s GDP growth has risen to a record high [year-on-year] previous quarter terms. But this is purely due to a weaker basis to compare with last year’s historical downturn, ”said Julian Evans-Pritchard, senior China economist at Capital Economics, in a note to Al Jazeera. .
“In [quarter-on-quarter] conditions, growth fell sharply again and excepted [the first quarter of] last year, slower than any other time in the past decade, ”he added.
Breaking down the headline numbers reveals weaknesses in key sectors of the economy.
According to Capital Economics, growth in industrial and construction activity fell to 1.3% in the first three months of the year from 2.3% in Q4 2020 based on quarterly comparison. Meanwhile, the service sector contracted by 2.3% after increasing by 3.9% based on similar comparisons.
Dutch Bank ING argues that the adjustment in industrial production growth is due to slower overseas clothing demand and slowing smart device production, possibly due to a shortage of computer chips across the country. bridge. The tighter anti-pollution measures imposed on refineries, ING said, could also contribute to slowing growth in industries.
But other parts of the economy continued to be strong.
Retail sales rose 1.8% in March from the previous month before rising 1.5% in February.
More French fries, please
Looking ahead, analysts say that the Chinese economy is unlikely to sustain rapid growth in the first quarter, given the government is imposing some of the stimulus measures it introduced during the period. crisis.
“Most quarters will see moderate growth because without the fundamental effects that drive comparability, ‘super-high’ growth will be difficult to repeat,” said ING chief economist. Greater China, Iris Pang, said in a note sent to Al Jazeera.
The shortage of chips – which has severely constrained production of cars and critical computer networking equipment such as routers in the US and Japan – and the direction of Sino-US relations could also be key factors. China’s recovery power is decisive, Mr. Pang said.
“Sino-US relations will be very important to China’s economic growth, mainly in terms of technology development. It is likely that the US will continue to put more pressure on China on this topic, ”Pang wrote.
“Concerns about the shortage of chips are becoming a practical problem for businesses, from investment to production to export and domestic sales. It is still unclear how long this bottleneck will be cleared. ”
For the whole year, ING expects China’s economy to grow by 8.6%, faster than the previous forecast of 7%.
That would far exceed the government’s annual growth target by 2021 of over 6%.