China: strong rebound in GDP expected in Q1

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China is expected to announce on Friday a strong rebound in its growth in the first quarter, largely due to a weak base of comparison with the beginning of 2020, when the Chinese economy was paralyzed by the epidemic.

A group of 15 experts interviewed by AFP expects on average an increase of 18.7% over one year in the gross domestic product (GDP) of the world’s second-largest economy over the January-March period.

Although questionable, China’s official GDP figure is still under scrutiny given the country’s weight in the global economy.

This rate of growth would set an all-time high for China since the publication of quarterly data on its growth in 1992.

A situation that contrasts sharply with that a year earlier when the COVID-19 epidemic paralyzed the country: China’s GDP in the first quarter of 2020 had collapsed by 6.8% – its worst economic performance in 44 years .

The Asian giant, where the new coronavirus appeared at the end of 2019, has since managed to practically eradicate the epidemic, thanks to strict movement controls, and to return to activity close to normal.

China also recorded positive growth last year (+ 2.3%), unlike most other economies that have fallen into recession.

And at the start of 2021, “all key activity indicators are showing strong increases,” notes analyst Tommy Wu, of the Oxford Economics firm.

Like imports, which jumped in March by 38.1% over one year, driven by massive purchases in electronics. A year earlier in the midst of an epidemic, they were down 0.9% with domestic consumption at half mast.

Domestic consumption, a driving force

As for the activity in services – a long weak link in the recovery with sluggish attendance in hotels and restaurants and transport – it was in March at its highest pace since the start of the year.

And the sector even had to hire to meet demand, according to the independent Caixin index, known to provide a true picture of the economic situation.

In the coming months, the return to normal in terms of health and the lifting of travel restrictions should continue to support domestic demand, said Wu.

Household consumption will also be one of the engines of Chinese growth this year along with exports, warns economist Rajiv Biswas, from IHS Markit.

If the recovery of the economy is undeniable, the figures can however appear in trompe l’oeil because of the weak basis of comparison with last year, nuance the analyst Raphie Hayat, of the bank Rabobank.

Experts interviewed by AFP are working on average growth of 8.5% this year in China, which would make it its fastest pace since 2011.

The International Monetary Fund is counting on a similar forecast (8.4%).

More cautious, Beijing meanwhile announced last month a growth target of at least 6% this year.