China’s economy grew by double digits in the latest quarter but an explosive rebound from the coronavirus pandemic is slowing abruptly as manufacturing and consumer spending return to normal.
The economy grew by 18.3% over a year ago, official data showed Friday, a figure that was magnified by comparison with early 2020 when factories and shops were closed and activity plunged. Growth compared with 2020’s final quarter, when recovery was underway, slowed to 0.6%, among the weakest of the past decade.
The latest figures “mask a sharp slowdown” in the world’s second-largest economy as stimulus spending and easy credit are wound down, Julian Evans-Pritchard of Capital economics said in a report.
“China’s post-COVID rebound is leveling off,” Evans-Pritchard said.
Manufacturing, auto sales and consumer spending have recovered to above pre-pandemic levels since the ruling Communist Party declared victory over the coronavirus last March and allowed factories and stores to reopen. Restaurants and shopping malls are filling up, though visitors still are checked for the virus’s telltale fever.
The economy “delivered a stable performance with a consolidated foundation and good momentum of growth,” the National Bureau of Statistics said in a report.
Forecasters expect economic growth of at least 7% this year but say China’s outlook is clouded by trade tension with Washington and disruptions in global supplies of processor chips needed by smartphone makers and other tech industries the ruling party is counting on to propel a self-sustaining economy and reduce reliance on trade.
The latest figures are in line with expectations due to the low basis for comparison in early 2020. The economy shrank by 6.8% in the first quarter, the worst performance since at least the mid-1960s.
Activity started to recover in the second quarter of 2020, when the economy expanded by 3.2% over a year earlier. That accelerated to 4.9% in the third quarter and 6.5% in the final three months of the year.
For the full year, China eked out 2.3% growth, becoming the only major economy to expand while United States, Europe and Japan struggled with renewed disease outbreaks.