Amidst the uncertainties and the instabilities caused in the global economy, China has clocked up record growth rates. China's GDP grew by a record 18.3% in the first quarter of 2021 compared to the same quarter last year. The growth is unprecedented; it is the highest growth rate clocked since 1992, the year when China began to keep quarterly records.
What Has Fueled This Surge?
Base Effect: The growth numbers are compared to the same quarter of 2020 when China's economy contracted by 6.8 %. The present growth numbers, therefore, are higher than average. The 18.3% growth is lesser than the 19% forecast by economists.
Government Support: China has provided substantial governmental fiscal and monetary support to several industries to tide over the COVID crisis. Growth numbers will normalize as the support mechanisms of the government exhausts.
China Builds Momentum
China has been building growth momentum even as the rest of the world's significant economies got battered by the pandemic. The world's second-largest economy was the only one to withhold in 2020 and the only primary one to grow at all with a 6.5% expansion in its last quarter and an overall yearly growth rate of 2.3%. Industrial output for March grew 14.1%, while retail sales increased by 34.2%.
"The national economy made a good start," National Bureau of Statistics spokeswoman Liu Aihua said while addressing reporters on Friday. China was able to control the pandemic as opposed to other countries because of the imposition of stringent anti-virus curbs and lockdowns in the initial stages of the pandemic outbreak. Sluggish private consumption remains a cause of concern due to high unemployment. "The recovery remains uneven, with private consumption lagging given rising unemployment," HSBC chief China economist Qu Hongbin said in a recent report.
Challenges Ahead For India
India's economy is consumer-driven; the vast unemployment and the corresponding slump in private consumption is a significant cause of concern. Putting more money in people's hands, revitalizing private investment and employment generation, needs to be pursued in highest priority. The Economist Intelligence Unit (EIU) has forecasted India's growth rate for 2021 to be 13 per cent. With the second wave and global uncertainties and instabilities, India will have to be focused, prudent, and steadfast in its pursuit of solutions to overcome the pandemic's economic impact.