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China GDP grows record 18.3% in Q1 as exports drive industry

Continued momentum hinges on global recovery from coronavirus

An aerial view of a container port on the Yangtze River in Nantong in eastern China's Jiangsu province on April 8, 2021. (Chinatopix via AP)   © AP

HEFEI, China -- Soaring exports helped China's gross domestic product grow a record 18.3% in the first quarter of 2021, rebounding from the 6.8% contraction in the same period last year at the start of the coronavirus pandemic, government data show.

The figure released Friday by the National Bureau of Statistics topped the median 17.9% estimate by 32 economists in a Nikkei poll. China's GDP growth for January-March followed a 6.5% gain in the final quarter of 2020.

The 18.3% growth is the highest since China began to publish quarterly data in 1992.

Greater demand by trading partners emerging from the pandemic fueled Chinese industrial production and investments. Exports jumped 49% during the quarter to $710 billion, while imports rose 28% to $593.6 billion.

China projects 6% GDP growth for 2021, the first year of the government's five-year economic plan. Policymakers envision growth from domestic consumption driven by national development of advanced technologies.

On a quarterly basis, the economy posted slower growth of 0.6% in the January-March period, reflecting the impact of new COVID-19 infections hitting northern China in January and February.

Economists expect growth to decelerate in the coming quarters.

"There is a possibility that we may not sustain the rapid growth because of the economic condition in other countries," Rui Mingjie, a professor of industrial economics at Fudan University in Shanghai, told Nikkei Asia.

"The foundation for economic recovery in China is not yet firm, as some service industries and small and micro businesses are still facing difficulties in production and operations," warned bureau spokesperson Liu Aihua. "We will step up assistance to ease issues faced by businesses in order to maintain the stability and sustainability of macro policies and promote a steady recovery of the economy."

Major economies continue to be hampered by new surges in COVID-19 infections. The U.S. averaged about 69,000 cases daily for the week ending April 12, while Germany averaged about 16,500.

China has expanded its inoculation program since March to include people 60 and older as the country aims to vaccinate 40% of the population by the end of June.

"Such progress will reduce the potential negative impact on merchandise and services trade growth" as the risk of delayed reopening of borders declines, "supporting continuous robust import growth as well," Citi Research wrote in a note on Tuesday., a Beijing-based international e-commerce service provider, said demand for Chinese household goods, women's apparels and wearable devices jumped at least threefold during the first quarter.

The company, whose top export markets include the U.S., France, and Italy, expects demand to grow with the pandemic under control in some countries.

"In the next three quarters, outdoor equipment, consumer electronics, health care and beauty, as well as pet products, will grow faster," Diane Wang, chairwoman of DHGate.

Manufacturing of electric vehicles, industrial robots and integrated circuits pushed up industrial production 24.5% during the quarter. The government had urged people to refrain from traveling during the Lunar Chinese New Year in February due to sporadic outbreaks, a measure that allowed earlier resumption of production.

Retail consumption rebounded 33.9%, thanks to stronger spending in food catering and consumer goods, reversing slumping demand last year.

Fixed assets investment grew 25.6%, backed by spending in infrastructure and real estate, as well as high-tech manufacturing.

Yue Su, the principal economist at The Economist Intelligence Unit expects more policy support for the economy to be introduced in the second half of the year. "Measures to boost consumption, such as handing out more digital yuan to residents in certain cities, is likely to be introduced from the third quarter of 2021, as the country celebrates the 100th anniversary of the founding of the Communist Party of China," Su wrote in a research note.

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