China’s economy expanded at its highest record rate in the first quarter, data showed on Friday in a sharp turnaround from the historic contraction caused by the coronavirus outbreak.
The world’s second largest economy was the only large one to grow at all in 2020, supported by strong retail spending and industrial activity as well as better than expected exports when the virus hit markets around the world.
It marks the fastest pace since quarterly records began three decades ago, although the GDP figure of 18.3 percent is slightly below forecasts in an AFP survey of economists.
While the disease first appeared in central China in late 2019, the country was also the fastest to bounce back after the authorities introduced strict control measures and consumers stayed at home.
“The national economy made a good start,” Liu Aihua, a spokeswoman for the National Bureau of Statistics, told reporters on Friday.
The sharp increase was partly due to “incomparable factors such as last year’s low base value and increased working days due to staff remaining during the lunar New Year holiday,” says Liu.
Migrant workers had been urged to stay in the areas where they work during the break due to fears that the annual massive migration could lead to local outbreaks.
But Liu added that quarterly growth has “shown a steady recovery”.
In key sectors, China was booming in its economic recovery after caution around the holiday season slowed and domestic consumption increased.
In March, the country’s industrial production rose by 14.1 percent compared with the year, which increased in the first quarter to 24.5 percent, official data show.
Retail sales increased by 34.2 percent, which increased from the first two months and increased the first quarter’s growth to 33.9 percent when life largely returned to normal.
However, Liu warned that the international landscape still contained “high uncertainties”.
Urban unemployment fell slightly to 5.3 percent, a figure that analysts are closely following as China’s rise in consumption lags behind in its industrial sectors.
“The recovery is still uneven, with private consumption lagging behind with rising unemployment,” China’s HSBC chief Qu Hongbin said in a recent report.
But economists expect growth factors to change in the coming months.
“Industrial production has taken the lead in the recovery last year, and it looks a bit tired now,” said UOB economist Ho Woei Chen, referring to its slower-than-expected growth.
“With the over-performance of the retail sector and a recoverable labor market, there is an expectation that private consumption will pick up,” she told AFP, adding that this should take the lead in growth later in the year.
But Oxford Economics head of the Asian economy Louis Kuijs warned that “a full recovery in household spending depends on convincing vaccination and further improvements in labor market conditions”.
Economists also added that China’s rebound after coronavirus is declining.
Julian Evans-Pritchard, senior Chinese economist at Capital Economics, said: “We expect quarterly quarterly growth to remain modest for the rest of this year as the recent upturn in construction and exports declines, pulling activity back against trend.”