(ATF) Eight Chinese provinces have recorded faster growth in gross domestic product (GDP) in the first quarter compared with the national GDP growth rate of 18.3%, data released by 30 Chinese provinces as of Monday showed.
They are Hubei, Hainan, Zhejiang, Jiangsu, Anhui, Guangdong and Jiangxi provinces, plus Chongqing municipal area. Tibet autonomous region is the only region that has not yet released its Q1 GDP data.
All provinces recorded a double-digit GDP growth rate in Q1, largely due to a low base from last year as a result of lockdown and economic disruption caused by the Covid-19 pandemic.
The government’s policy to ask people to avoid travel during the Lunar New Year holiday in February after sporadic reemergence of Covid-19 also contributed to economic growth in the first quarter, Liu Aihua, a spokesperson from the National Bureau of Statistics, said. The disruption to production was reduced when migrant workers worked until right before the holiday and returned to work faster than in regular years.
Hubei, the epicentre of the coronavirus outbreak last year, recorded the fastest year-over-year growth in GDP in Q1, which was 58.3%. However, the province’s GDP figure was still smaller than Q1 of 2019.
Hainan, the tropical island province, which authorities declared a “free trade port” last June, and the eastern coastal provinces of Zhejiang and Jiangsu, rank from second to fourth places by GDP growth rate.
China’s four biggest cities, namely Beijing, Shanghai, Guangzhou and Shenzhen, all recorded over 17% of GDP growth in Q1. Of the four, Guangzhou is the only city that has outpaced the national GDP growth, recording growth of 19.5%.
In addition to a low base factor from Q1 2020, rising foreign trade, retail activity and investment also contributed to robust GDP growth across these cities, local statistics bureaux said. Each of these cities’ GDP in Q1 was larger than many provinces, such as Shaanxi and Yunnan.
Because China’s economy was significantly impacted by the Covid-19 pandemic in Q1 of last year, all regions have also released a two-year average growth figure as a more accurate indicator of economic growth – factoring in the Q1 data from both 2019 and 2020.
In terms of two-year average growth in Q1, nine out of the 30 provinces recorded over 6% of growth, namely Hainan, Guizhou, Jiangxi, Jiangsu, Zhejiang, Hunan, and Sichuan provinces, as well as Guangxi Zhuang and Ningxia Hui autonomous regions.
While Hubei has dropped out of this list, Hainan surpasses all other provinces with a 7% average growth rate in Q1 in the last two years. The two-year average changes for Shanghai and Beijing were 4.7% and 4.6%, respectively.
Guangdong and Jiangsu provinces lead China in GDP for the first quarter, and Shandong provinces runs a distant third place. The three provinces’ GDP volumes were 2.71 trillion yuan ($418 billion), 2.59 trillion yuan ($399 billion) and 1.81 trillion yuan ($279 billion), respectively.
Although China’s GDP growth was 18.3% based on a year-on-year calculation, the figure is only 10.3% if compared with the 2019 data. China’s GDP growth target for the year is above 6%.
“The growth of the major indicators, including retail sales, fixed-asset investment, freight traffic and real estate investment, were hardly robust, except construction perhaps,” Chi Lo, Senior Economist at BNP Paribas Asset Management, said.
The Q1 data shows that the consumption and demand side of China’s economy is still lagging the growth of the production side, Chi said.
Slowing growth and rising financial stress (reflected by rising defaults) may eventually prompt the central bank to ease, albeit still selectively, but that will likely be in the second half, he added.