China’s post-COVID rebound levels off as GDP growth slows to 0.6%

China’s economic growth slowed at the start of this year as its post-pandemic rebound began to level off, official figures showed.

GDP grew by just 0.6% in the first quarter, missing expectations of a 1.5% increase and down from 3.2% in the last three months of 2020.

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People look at fresh seafood in a supermarket following an outbreak of the coronavirus disease (COVID-19) in Beijing, China, August 13, 2020

Retail sales growth was better than expected

But the figures also showed that the world’s second biggest economy was 18.3% larger compared with the same period a year ago when it was in the grip of the coronavirus crisis.

China fell into its deepest contraction in decades at the start of 2020 as the pandemic took hold but it was also quick to recover.

Beijing allowed factories and stores to reopen in March last year and since then manufacturing, car sales and other consumer activity have already returned to pre-COVID levels.

China’s overall growth of 2.3% for 2020 meant it was the only major economy to avoid shrinking last year, but it was still the weakest performance in more than four decades.

Now, some experts warn that recovery remains uncertain with global demand for its exports hampered by continued COVID restrictions in some parts of the world.

There are also signs of Beijing trying to rein in financial risks in overheating parts of the economy.

The latest quarterly figures pointed to continued strength in China’s consumer economy, with better than expected growth in retail sales but a slowdown in manufacturing growth.

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Liu Ahua, spokeswoman for the National Bureau of Statistics, said the momentum of economic recovery had continued and “positive factors have increased” – but that with the pandemic still spreading overseas, the “international environment is still complex”.

Julian Evans-Pritchard, senior China economist at Capital Economics, said: “With the economy already above its pre-virus trend and policy support being withdrawn, China’s post-COVID rebound is levelling off.

“We expect quarter-on-quarter growth to remain modest during the rest of this year as the recent boom in construction and exports unwinds.”

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