China's Q1 GDP Growth Hits Record High but Slows from Previous Quarter

On April 16, 2021, China's National Bureau of Statistics (NBS) announced that China's economic growth remained robust during the first quarter of 2021. Gross Domestic Product (GDP) grew 18.3% year-on-year in the first three months of 2021, marking China’s strongest year-on-year growth since NBS began keeping quarterly GDP records in 1992. This is mainly due to China’s recovery from its significant GDP contraction recorded in Q1 2020. Despite the record, growth slightly missed analyst estimates of an 18.5-19% increase, according to the Reuters survey of analysts. Compared to Q4 2020, economic activity in China, as captured by GDP growth, largely stagnated, increasing by only 0.6% quarter-on-quarter.

Overall, the update from NBS indicates that China's economic growth has normalized and that post contraction recovery momentum stabilized in the first quarter. Due to the low base effect, major indicators, including industrial production, service, retail sales, fixed-asset investment, exports, FDI inflow, all registered two-digit year-on-year growth. The unemployment rate remained low as more jobs were introduced to the market. Consumer prices were also stable from January to March. Producer prices, particularly upstream production materials, increased in expense over the quarter. To support China's policy goal in 2021, macro-policies in the January-March period remained stable and saw targeted improvements in specific areas including living standards and small & micro-businesses.

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