China’s economic recovery quickened sharply in the first quarter from last year’s deep COVID-19 slump, propelled by stronger demand at home and abroad, and continued government support for smaller firms.
However, the brisk expansion, heavily skewed by the plunge in activity a year earlier, is expected to moderate later this year, as the government turns its attention to reining in financial risks in overheating parts of the economy.
GDP jumped 18.3 percent in the first quarter from a year earlier, official data showed yesterday.
Photo: EPA-EFE
While that undershot the 19 percent forecast by economists in a Reuters poll, it was the fastest growth since quarterly records began in 1992 and up from 6.5 percent in the fourth quarter last year.
“The upshot is that with the economy already above its pre-virus trend and policy support being withdrawn, China’s post-COVID rebound is leveling off,” Capital Economics senior China economist Julian Evans-Pritchard said. “We expect quarter-on-quarter growth to remain modest during the rest of this year as the recent boom in construction and exports unwinds, pulling activity back towards trend.”
Aided by strict virus containment measures and emergency relief for businesses, the economy has recovered from a steep 6.8 percent slump in the first three months of last year, when an outbreak of COVID-19 in Wuhan rapidly became a crippling pandemic that has killed about 3 million worldwide.
China’s rebound has been led by exports as factories raced to fill overseas orders and more recently a steady pickup in consumption, as shoppers returned to restaurants, malls and auto dealerships.
Retail sales increased 34.2 percent year-on-year last month, beating a 28 percent gain expected by analysts and stronger than the 33.8 percent jump seen in the first two months of the year.
However, other data showed a moderation in expansion with sequential growth slowing to 0.6 percent in January-March from a revised 3.2 percent in the previous quarter, missing expectations for a 1.5 percent increase.
Factory output grew 14.1 percent year-on-year last month, slowing from a 35.1 percent surge in the January-February period and lagging a forecast 17.2 percent rise.
Chinese National Bureau of Statistics spokeswoman Liu Aihua (劉愛華) told a news conference yesterday that while the economy started the year on a firm footing, the services sector and smaller firms still faced challenges, while consumer inflation was likely to remain moderate.
Data last week showed that consumer prices rising at only a modest pace last month, even as factory gate inflation hit a near three-year high.
“The trend of normalization may continue for the rest of the year, and domestic consumption is expected to be the major growth driver,” said Chaoping Zhu (朱超平), global market strategist at JP Morgan Asset Management in Shanghai. “In terms of policy response, the central bank and fiscal authorities are returning to a more neutral stance, although some selective measures might be continued in order to support the small and medium-sized enterprises.”
Li Wei (李煒), senior China economist at Standard Chartered in Shanghai, expected second-quarter growth to slow to 7 percent.
The world’s second-largest economy is expected to grow 8.6 percent this year, according to a Reuters poll, which would easily beat the government’s annual growth target of above 6 percent.
China’s GDP grew just 2.3 percent rise last year, its weakest expansion in 44 years, but still making it the only major economy to avoid contraction as other industrial powers struggled with the COVID-19 pandemic hit.
SECOND-RATE: Models distilled from US products do not perform the same as the original and undo measures that ensure the systems are neutral, the US’ cable said The US Department of State has ordered a global push to bring attention to what it said are widespread efforts by Chinese companies, including artificial intelligence (AI) start-up DeepSeek (深度求索), to steal intellectual property from US AI labs, according to a diplomatic cable. The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about “concerns over adversaries’ extraction and distillation of US AI models.” Distillation is the process of training smaller AI models using output from larger, more expensive ones to lower the costs of training a powerful new
Singapore-based ride-hailing and delivery giant Grab Holdings’ planned acquisition of Foodpanda’s Taiwan operations has yet to enter the formal review stage, as regulators await supplementary documents, the Fair Trade Commission (FTC) said yesterday. Acting FTC Chairman Chen Chih-min (陳志民) told the legislature’s Economics Committee that although Grab submitted its application on March 27, the case has not been officially accepted because required materials remain incomplete. Once the filing is finalized, the FTC would launch a formal probe into the deal, focusing on issues such as cross-shareholding and potential restrictions on market competition, Chen told lawmakers. Grab last month announced that it would acquire
Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) have repeatedly hit new highs, but an equity analyst said the stock’s valuation remains within a reasonable range and any pullback would likely be technical. The contract chipmaker’s historical price-to-earnings (P/E) ratio has ranged between 20 and 30, Cathay Futures Consultant Co (國泰證期) analyst Tsai Ming-han (蔡明翰) told Central News Agency. With market consensus projecting that TSMC would post earnings per share of about NT$100 (US$3.17) this year, supported by strong global demand for artificial intelligence (AI) applications, and the stock currently trading at a P/E ratio of below 25, Tsai said the valuation
The artificial intelligence (AI) boom has triggered a seismic reshuffling of global equity markets, with Taiwan and South Korea muscling past European nations one by one. With its stock market now valued at nearly US$4.3 trillion, Taiwan surpassed the UK, Europe’s biggest market, earlier this month, data compiled by Bloomberg showed. South Korea is about US$140 billion away from doing the same. The tech-heavy Asian markets have shot past Germany and France in the past seven months. The shift is largely down to massive gains in shares of three companies that provide essential hardware for AI: Taiwan Semiconductor Manufacturing Co (TSMC, 台積電),
RSS