China's first-quarter GDP to hit record growth as recovery speeds up

© Reuters. FILE PHOTO: A worker works at Xunxi factory, which is an affiliate of Chinese e-commerce giant Alibaba, during a media tour, in Hangzhou

BEIJING (Reuters) – China’s economic rebound likely quickened sharply in the first quarter from a coronavirus-induced slump earlier last year, propelled by stronger demand at home and abroad and continued government support for smaller firms.

Data released on Friday is expected to show gross domestic product (GDP) jumping a record 19% in the first quarter from a year earlier, after a 6.5% expansion in the last quarter of 2020, a Reuters poll showed.

While the reading will be heavily skewed by the plunge in activity a year earlier, the expected jump would be the strongest since at least 1992, when official quarterly records started.

Aided by strict virus containment measures and emergency relief for businesses, the economy has recovered steadily from a steep 6.8% slump in the first three months of 2020, when an outbreak of COVID-19 in the central city of Wuhan turned into a full blown epidemic.

The recovery has been led by export strength as factories raced to fill overseas orders, as consumption steadily picks up despite sporadic COVID-19 cases in some cities.

On a quarterly basis, growth likely slowed to 1.5% in January-March from 2.6% in the previous quarter, the poll showed.

China releases first-quarter GDP data on Friday (0200 GMT), along with March factory output, retail sales and fixed-asset investment.

March industrial output is expected to rise 17.2% from a year earlier, slowing from a 35.1% rise in the first two months. March retail sales growth is expected to cool to 28% from 33.8% in January-February.

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Analysts polled by Reuters expected the world’s second-largest economy to grow 8.6% in 2021, quickening from the previous year’s 2.3% pace to the strongest performance in a decade.

That would easily beat the government’s annual growth target of above 6% this year.

With the economy back on a more solid footing, China’s central bank is turning its focus to cooling credit growth to help contain debt and financial risks, but it is treading cautiously to avoid derailing the recovery, analysts said. Policymakers, meanwhile, have vowed not to make any sudden policy shifts.

Authorities are especially concerned about financial risks involving the country’s overheated property market and have asked banks to trim their loan books this year to guard against asset bubbles.

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