China started the year with a record expansion that even surpassed the glory days of the 1990s, when manufacturing and export stardom beckoned.
The first-quarter performance — stellar as the headlines are — masks shortcomings and vulnerabilities that will likely constrain the economy in coming months.
GDP jumped 18.3 percent in the first quarter of this year from a year earlier, the Chinese National Bureau of Statistics said Friday.
Photo: AP
That is an impressive performance, albeit one flattered by comparisons with the first three months of last year, when the COVID-19 pandemic first hit.
Compared with the fourth quarter of last year, growth was less stratospheric — just 0.6 percent, down from 2.6 percent in the prior period.
Retail sales, considered a soft spot in the recovery, last month soared by more than one-third from a year earlier, monthly data released simultaneously showed.
Overall, the figures support projections of a bumper year for the world economy after the disastrous contraction of last year.
The US’ powerful rebound backs this optimism, too, with growth projected at 6.4 percent this year, compared with China’s 8.4 percent, according to the IMF estimates last week.
Notwithstanding critiques about widening inequality between the best and the rest, we would all be considerably poorer without fine report cards from Washington and Beijing.
However, is China really so far ahead, and is the future as rosy as it seemed decades ago, when it catapulted past one G7 economy after another?
Some imperfections suggest a tougher road. A decent chunk of this expansion is attributed to the surge in exports generated by US stimulus.
The People’s Bank of China is wary of exuberance and inclined to tap the brakes. With the pandemic now under control and growth looking hale, Beijing can return to one of its main pre-pandemic preoccupations: avoiding buildups of risk and excessive debt accumulation borne of loose financial conditions.
To that end, the central bank last quarter withdrew funds from the financial system. Authorities are trying to rein in leverage, while doing just enough to support the economy and ensure liquidity.
For all the anxiety about the US Federal Reserve scaling back bond buying, the real taper tantrum might emanate from Beijing, as I have written.
This stance also suggests that monetary officials are not overly bothered by possible contagion from the stress engulfing China Huarong Asset Management Co (中國華融資產管理), one of the nation’s largest distressed-debt managers.
With the Fed and US Congress juicing global growth, China can afford to be prudent. The heavy lifting is being done elsewhere.
The US’ boom, while it lasts, is great news for exporters — and China is the biggest.
Shipments to the US last month jumped by more than half, compared with a year earlier.
That bounty is not restricted to Beijing. South Korean exports rose 16.5 percent over the same period.
Purchasing managers’ indices across Asia, a barometer of manufacturing, are climbing. Barring a setback to the global economy, Singapore’s GDP growth is likely to exceed the upper end of the official 4 to 6 percent forecast range, the city-state’s central bank said this week.
The past 20 years have been dominated by a narrative that China drives the world, while the West settles into a funk where GDP moves ahead by 1 or 2 percent annually.
However, the US is catching a wave, too. Growth might be 7.7 percent this year, according to Bloomberg Economics.
A number in excess of 7 percent in the US has not been seen since 1984.
Strong readings on Thursday on retail sales — the second-biggest rise since 1992 — and an important factory gauge turning in the best result since 1973 only strengthen a bullish scenario.
Given the cataclysm wrought by the pandemic, it would be churlish not to welcome the vigorous first-quarter numbers from China. Bear in mind, though, Beijing did not build this recovery all by itself.
Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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