China’s economy likely expanded at a record pace of 19% in the first quarter, the strongest since at least 1992, according to Reuters. The growth is fueled by domestic and foreign demand recovery and as policy support for ailing smaller firms continued.
China’s first quarter record growth is a signal that the world’s second-largest economy has continued to gain momentum, after 6.5% expansion in the last quarter of 2020.
Growth is projected to moderate later in the year, with expectations that China will beat its growth target of above 6% in 2021.
Analysts project China’s economic growth to be 8.6% this year, a jump from the previous year’s 2.3% pace, and slightly higher than January’s forecast of 8.4%.
China’s growth is projected to moderate to 5.5% in 2022, reflecting global economic normalization and Beijing’s long-term slowing trajectory due to structural and demographic changes.
Domestic consumption is expected to rebound to 10% in real terms while nominal export growth will pick up to 16%
Analysts expects China to maintain its one-year loan prime rate steady at 3.85% and bank’s reserve retirement ratios at 12.5% until the end of 2021.
China’s benchmark deposit rate is expected to be maintained at 1.5% until the end of 2021.
Consumer inflation is expected to slow to 1.6% in 2021, from 2.5% in 2020 and pick up to 2/3% in 2022.
China’s authorities are concerned about financial risks of the overheated property markets and have asked banks to trim their loan books this year.
China’s stocks and the Yuan are currently declining. SSE Composite Index is down 0.52%,, USDCNY is up 0.06%
