China’s economy grew 18.3 per cent in the first three months of 2021, further signalling its strong recovery from the Covid-19 pandemic.
This rise marks the biggest jump in GDP since quarterly records began in 1992 and appears to cement the view that China is recovering from the pandemic at a significantly faster pace than its peers in developed markets.
But the 18.3 per cent growth is relative to the first quarter of 2020 (when had shrunk by 6.8 per cent in the coronavirus lockdown) rather than the previous quarter, which gives the figure a positive skew.
Economists had expected growth slightly higher – at around 19 per cent – given the strength of recent economic indicators and the fact that 2021’s first quarter was being compared with the historic contraction in 2020.
China’s quarterly GDP growth year on year
Source: FT
Robert Alster, chief investment officer at Close Brothers Asset Management, said: “These numbers make clear that the Chinese economy has, at this point, passed the Covid-19 test with flying colours compared to the West.”
Indeed, Alster noted that while not directly responsible for the growth, the speed in which China’s manufacturing sector has adapted to produce the rapid Covid tests that are available in the UK is indicative of its economic agility.
“Looking forward, Beijing has indicated that stimulus measures will be withdrawn gradually to keep supporting growth. This message, set against a backdrop of a very achievable 6 per cent growth target for 2021, will provide comfort to world markets at a time of uncertainty,” he said.
Lynda Zhou, portfolio manager at Fidelity International, added: “The rollout of vaccine, economic recovery and policies remain the three major drivers that lead the market, and when the liquidity-driven valuation comes to an end, strategic focus should be put on periodic and structural opportunities of specific stocks.
“In terms of sectors, I am bullish on cyclical sectors that are supported by decent business performance, the consumption sector with stable business performance and the import substitution material and industrial sector that will benefit from a more centralized market.”