China's economy in 1Q21 grew 18.3%YoY, this surge was primarily attributed to a low base in 1Q20. On a QoQ basis, which may better depict the present economic growth, China's economy grew by a mere 0.6% due to the fragility of private consumption, the uneven recovery of the manufacturing sector and investment in each industry, and the overall exports, which remain under pressure from the global economic recovery.
In details: 1) The service sector that is related to private consumption continued to exhibit steady growth, but remains lower than the pre-pandemic period. 2) China's manufacturing sector has enjoyed consistent growth albeit at different rates for each industry, driven by increased utilization of advanced technologies in the manufacturing sector. Notable examples include the production of alternative fuel vehicles, and microcomputer-driven robots and integrated circuits. 3) Fixed asset investment saw slow recovery, especially in traditional industries. However, exponential growth has been seen in industries that have adopted high technology and those related to people's quality of life. 4) China's overall exports in 1Q21 continued to grow due to the low base from the same period of the previous year. However, the total export figure remained lower than that of the previous quarter. Notably, China's exports to the United States showed the highest growth at 61.3%YoY in spite of the ongoing trade war.
KResearch maintains its projection of China's full-year economic growth in 2021 within the range of 8.0-8.5%. Its growth trend over the forthcoming period continues to be fraught with risks revolving around the progress and effectiveness of vaccination efforts, potential risk posed by the emergence of new COVID-19 strains, private consumption and investment that may slow down as a result of early withdrawal of government stimulus measures, the geopolitical risk presented by the tension between China and the United States which shows no sign of resolving, as well as the issuance of additional retaliatory trade measures against China by its trade partners. For these reasons, these economic indicators are subject to high volatility. Amid multiple challenges, the Chinese government still has ample tools and resources especially monetary and fiscal measures to sustain its economic growth for this year to be close to prior projections.
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