China Records Highest Quarterly GDP Growth Ever at 18.3% in Q1

Beijing: China's GDP jumped a record 18.3% in the first quarter of 2021, riding on strong domestic and foreign demand and aided by recovery from a low base in early 2020 when COVID-19 stalled the world's second-largest economy, according to statistics released on Friday.

The gross domestic product (GDP) reached 24.93 trillion yuan (about $3.82 trillion) in Q1, data released by the National Bureau of Statistics (NBS) said.

This is the highest quarterly growth rate since China first began publishing GDP data in 1993.

The double-digit growth puts the average Q1 growth of 2020 and 2021 at 5% from the 2019 level, state-run Xinhua news agency reported.

In the first three months, China saw a steady industrial production rebound, improvement in market sales, recovery in fixed-asset investment, and noticeable momentum in foreign trade of goods, it said.

China's economy, which was the first to be hit by the coronavirus pandemic and early to recover from its impact, grew 2.3% in 2020, registering the lowest annual growth rate in 45 years.

The GDP of the world's second-largest economy grew by 2.3% expanding to $15.42 trillion in 2020, according to the data released by the NBS.

In the local currency, the GDP exceeded the 100 trillion yuan ($15.42 trillion) threshold to 101.5986 trillion yuan.

Early this month, the International Monetary Fund or IMF increased China's GDP projection to 8.4% for this year, a 10-year high but cautioned that the growth is unbalanced and private consumption has not recovered as fast.

The IMF projection is higher than the over 6% target fixed by the Chinese government for this year.

In its World Economic Outlook, the IMF also cautioned Beijing to address its high corporate debt levels resulting from the easy monetary policy put in place during the coronavirus pandemic.

“It’s still very heavily reliant on public investment. And private consumption has not recovered as fast as we would have hoped,” Gita Gopinath, the IMF’s chief economist and director of research, said while releasing the report.

China-US tensions that remain elevated on multiple fronts, ranging from international trade to intellectual property and cybersecurity, also got a mention in the report.

"Domestic economic disparities arising from the pandemic downturn may also prompt new trade barriers…Amid already high levels of trade restrictions, such actions would add to inefficiencies and weigh on the recovery. Furthermore, risks of protectionist tendencies surrounding technology are emerging," the IMF report said.

The IMF has also advised China to further address its high corporate debt levels that have resulted from the easy monetary policy put in place during the coronavirus pandemic.

Releasing the Q1 data on Friday, NBS spokeswoman Liu Aihua said “the economic recovery in the first quarter of this year continued, and positive factors are accumulating”.

 “At the same time, we must also see that the COVID-19 epidemic is still spreading globally, the international landscape is complicated and severe, the foundation for domestic economic recovery is not yet solid, and some service industries and small and micro enterprises are still facing more difficulties in their production and operation,” Liu was quoted by the Hong Kong-based The South China Morning Post as saying.

As per the Q1 data, China's value-added industrial output, an important economic indicator, went up 24.5% year on year in the first quarter this year as factory activities continued to pick up.

Output by major industrial firms increased by 14% compared with the first quarter in 2019, resulting in an average year-on-year Q1 growth of 6.8% over the past two years, the Xinhua report said.

It also said China's surveyed urban unemployment rate stood at 5.3 % in March, 0.6 percentage points lower than the same period last year.

A total of 2.97 million new urban jobs were created in the first quarter, the NBS said.

China's fixed-asset investment (FAI) went up 25.6% year on year in the first quarter of 2021, the NBS said.

The FAI amounted to 9.6 trillion yuan (about $1.47 trillion) in the first three months, according to the NBS.

The double-digit growth was driven by a low base of comparison early last year when COVID-19 paralysed economic activities in China. Compared with the 2019 level, FAI growth came in at 6%.

Investment by the state sector went up 25.3% during the January-March period, while private-sector investment rose 26%.