Handle comments on Chinese GDP growth carefully – exemplified by Q1

08:59 by Hubert Fromlet, Kalmar

The National Bureau of Statistics (NBS) in Beijing published a couple of days ago the preliminary numbers for GDP growth during the first quarter 2021. An increase of 18.3 % was noted year on year (yoy) – highly appreciated by many commentators also in our part of the world. Sure, a number of them pointed also at the weak GDP development in the same period last year due to the corona shutdown. Consequently, the numerically strong GDP rise yoy in Q1 could be expected. But is the published number really reflecting very strong growth?

Modest growth in Q1compared to Q4

Despite frequently still existing – historically caused – doubts about transparency and quality of Chinese GDP statistics it should not be questioned that China had a remarkable recovery in the second half of 2020. However, there is a catch: Compared to Q4 last year, recent official GDP growth for Q1 looks much more modest (+0.6% qoq). We even can observe a slowdown compared to previous quarterly changes.

Chinese official statistics show the following numbers according to NBS:

GDP changes yoy

GDP changes qoq (%)

Q 1  2021

18.3

0.6

Q 4  2020

6.5

3.2

Q 3  2020

4.9

3.1

Q 2  2020

3.2

10.1

Q 1  2020

-6.8

-9.3

Q 4  2019

5.8

1.6

Q 3  2019

5.9

1.3

Re-newed acceleration in the cards – growth goals will be met

I have not found any illuminating comments on the GDP development of the first quarter this year. Sure, there were the new-year celebrations with production shortfalls. We also noticed softer PMI subindicators for March (new orders, production). But what else can be added? More transparency would have been nice.

However, it cannot be ruled out that some strengthening growth took place already at the end of Q1. Re-newed statistical acceleration of GDP growth will probably start in Q2, due to improving international demand in the first place. Altogether, China will most probably continue to be on track to meet the official objective of “more than 6 percent GDP growth”. 7-8 % seem to be achievable in 2021.

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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