China’s National Bureau of Statistics will release its first quarterly gross domestic product growth estimate on Friday, with banner figures slated for a year after the Covid-19 pandemic brought its economy big. second world stopped.
The country recorded a year of history shrinkage nearly 7% in the first quarter of 2020, paving the way for a strong recovery this year.
Exports in March are the most recent example of this “low base” effect, up more than 30% from the same month last year, when China is locked out to contain coronavirus.
Here are five things to watch out for in the Friday release.
How large will the first quarter bounce rate be?
Larry Hu, chief China economist at Macquarie, said first-quarter economic output “was on track to grow. [expand] 18% ”annually.
But this “pre-pandemic boom” dynamic will slow for the rest of 2021. China’s economy grew 6.5% in the fourth quarter and 2.3% for the whole year – making the country a The only major economy to expand in 2020.
Premier Li Keqiang announced a full year growth target “at least 6%” at the annual meeting of the National People’s Congress, China’s rubber-stamped parliament, held last month in Beijing.
Why not aim higher?
Chinese financial officials, led by Liu HeThe Deputy Prime Minister and most powerful finance official in the country are eager to curb some of the stimulus that support the economy but also reverse their success in stabilizing overall debt levels China.
Liu’s team is determined to restore financial discipline. It has refused to accept “helicopter money” and other demand-side stimulus launched by major Western economies such as the US.
The seriousness of their intentions was made clear in February, when the People’s Bank of China quietly instructed domestic and foreign lenders to keep the first quarter. new loan growth sideways compared to the same period last year.
Will they be successful?
Granting diktats to China’s state-controlled banking system is often ineffective, even for powerful officials like Liu.
President Xi Jinping has declared that “home is for dwelling, not for speculation”, and Top banking regulators pointed out the real estate sector is the biggest risk of the “gray rhino” for the stability of the economy.
But country asset boom has not reduced yet. Real estate-related loan and investment growth grew 38% and 14% y-o-y in the January-February period, respectively.
Steel production also rose 6% last year to a record 1.1 billion tons. The government’s efforts to contain the sector, which exacerbated levels of air pollution across northern China this spring, led to higher prices, spurring more production.
Consumption and service will recover?
China’s impressive economic recovery last year was fueled by a surge in industrial production, while retail sales remained relatively weak. The service sector also had to bear the brunt of the pandemic.
This is in contrast to what Beijing wants to see, as it tries to rebalance its economy from consumer-oriented credit-based industrial activity. But this proved to be very difficult. China recorded consumer prices deflation in November negative 0.5% for the first time in more than 10 years.
What other difficulties does Beijing face as it tries to curb the recovery?
The Xi administration does not want to take too strong of the barrage measures ahead of the centennial anniversary of the founding of the Communist Party of China, to be held on July 1.
“The Party will do ‘whatever it takes’ to stop the economic downturn or the bad stock market crash from ruining the run up [the] Diana Choyleva at Enodo Economics said. “Thereafter, a new emphasis on reducing China’s debt burden will lead to tighter policy and liquidity conditions.”
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