China’s economy expanded by a record 18.3 per cent in the first three months of 2021, as industrial production and household consumption surged compared to the same period a year earlier when coronavirus restrictions were at their peak.
Gross domestic product (GDP) grew to 24.9 trillion yuan ($3.82tn) during the period, up 0.6 per cent when compared with the fourth quarter of 2020, China's National Bureau of Statistics said in a statement on Friday. The economy grew by 6.5 per cent in the last quarter of 2020.
“Generally speaking, the national economy in the first quarter presented continued momentum of stable recovery,” the National Bureau of Statistics said. “However, we must be aware that the Covid-19 epidemic is still spreading globally and the international landscape is complicated with high uncertainties and instabilities.”
China will overtake the US to become the world's biggest economy in 2028, five years earlier than previously anticipated, as it recovers faster from the coronavirus pandemic, according to the Centre for Economics and Business Research.
The economy is expected to grow an average of 5.7 per cent a year from 2021 to 2025 before slowing to 4.5 per cent a year from 2026 to 2030, according to the CEBR.
China was the first country to report the coronavirus in December last year. However, strict movement restrictions introduced by Beijing helped contain the outbreak in the country, while the rollout of vaccines and the subsequent easing of lockdown measures accelerated its economic recovery. China’s economy is forecast to grow 8.2 per cent in 2021 after output fell to 2.3 per cent last year, from 5.8 per cent in 2019, according to the International Monetary Fund.
"There is nothing more promising than seeing China in good health for the average investor. No wonder we’ve seen oil extending gains above the 50-day moving average," Ipek Ozkardeskaya, a senior analyst at Swissquote, said.
The first quarter data underscores the rapid pace of recovery in China, supported by new industrial activity and low Covid-19 infection rates. As of Friday, the number of infections in China reached 90,468 with 4,636 deaths, according to Worldometer. Total recoveries stand at 85,533.
The sharp jump in growth in the first quarter was supported by industrial production, which grew by 24.5 per cent. In terms of sectors, manufacturing increased by 27.3 per cent year-on-year, mining production increased by 10.1 per cent and the production and supply of electricity, thermal power, gas and water increased by 15.9 per cent, according to the National Bureau of Statistics.
In March, China's Manufacturing Purchasing Managers’ Index stood at 51.9 per cent, staying above the neutral 50 threshold for 13 months in a row, the statement added.
“The foundation for domestic economic recovery is yet to be consolidated and the longstanding structural problems remain prominent with new situations and issues arising from development,” the Bureau said in the statement.
“We should maintain the consistency, stability and sustainability of macro policies, deepen the reform and opening-up and innovation, keep the economy performing within a reasonable range and promote the quality development of the economy in a solid way.”
The number of jobs created during thre three-month period reached 2.97 million and per capita disposable income rose 13.7 per cent. The urban unemployment rate stood at 5.3 per cent in March.
The expansion in GDP was strongly supported by household consumption, with retail sales of consumer goods in China during the three-month period increasing by 33.9 per cent year-on-year, while online retail sales were up 29.9 per cent.
Despite this, consumer prices remained stable. Core consumer price inflation excluding the price of food and energy remained flat during the period.
"China not only has controlled coronavirus to a much better degree as compared to the US or Europe, but the economic growth has been enormously impressive," Naeem Aslam, chief market analyst at brokerage Avatrade, said. "It is not only the GDP growth number that has stolen all the headlines, but if we look at the retail sales number, which we consider as a pure naked form of consumer confidence, they aren't short of any thunder either."
Fixed asset investment rose 25.6 per cent in the first quarter. Investment in infrastructure increased by 29.7 per cent; manufacturing spend up 29.8 per cent and real estate development by 25.6 per cent year-on-year.
The total value of Chinese imports and exports of goods saw an annual increase of 29.2 per cent in the first quarter. The value of exports was up by 38.7 per cent year-on-year; while imports rose by 19.3 per cent, the bureau said.