The Telegraph
China's economic recovery picked up in the first quarter from last year's deep coronavirus slump, propelled by stronger demand at home and abroad and continued government support for smaller firms. But the brisk expansion, heavily skewed by the plunge in activity a year earlier, is expected to moderate later this year as the government turns its attention to reining in financial risks in overheating parts of the economy. Gross domestic product (GDP) jumped 18.3pc in the first quarter from a year earlier, official data showed on Friday. While that undershot the 19pc forecast by economists in a Reuters poll, it was the fastest growth since quarterly records began in 1992 and up from 6.5pc in the fourth quarter last year. Aided by strict virus containment measures and emergency relief for businesses, the economy has recovered from a steep 6.8pc slump in the first three months of 2020, when an outbreak of Covid-19 in the central city of Wuhan rapidly became a crippling pandemic that has killed about three million worldwide. China's rebound has been led by exports as factories raced to fill overseas orders and more recently a steady pickup in consumption as shoppers returned to restaurants, shopping centres and car dealerships. Retail sales increased 34.2pc year-on-year in March, beating a 28pc gain expected by analysts and stronger than the 33.8pc jump seen in the first two months of the year. Other data, however, showed a moderation in expansion with quarter-on-quarter growth slowing to 0.6pc in January-March from a revised 3.2pc in the previous quarter, missing expectations for a 1.5pc increase. Factory output grew 14.1pc year-on-year in March, slowing from a 35.1pc surge in the January-February period and lagging a forecast 17.2pc rise. National Bureau of Statistics spokeswoman Liu Aihua told a news conference on Friday while the economy started 2021 on a firm footing, the services sector and smaller firms still faced challenges, and consumer inflation was likely to remain moderate. Data last week showed consumer prices rising at only a modest pace in March, even as factory gate inflation hit a near three-year high. "Looking forward, the trend of normalisation may continue for the rest of the year, and domestic consumption is expected to be the major growth driver," said Chaoping Zhu, global market strategist at JPMorgan Asset Management in Shanghai. "In terms of policy response, the central bank and fiscal authorities are returning to a more neutral stance, although some selective measures might be continued in order to support the small and medium-sized enterprises." Li Wei, economist at Standard Chartered in Shanghai, expected second-quarter growth to slow to 7pc. The world's second-largest economy is tipped to grow 8.6pc in 2021, according to a Reuters poll, which would easily beat the government's 2021 annual growth target of above 6pc. China's GDP grew just 2.3pc last year, its weakest expansion in 44 years. It was still the only major economy to avoid contraction as other industrial powers struggled with the pandemic.
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