Abstract: China’s economy continued to surge at a fast pace in the first quarter of 2021. From the perspective of production, we saw a rapid growth in industrial production and a quick recovery in service sector. As for expenditure, the investment, especially the government's willingness to invest in infrastructure, has slowed down, yet the real estate investment remains resilient, and the high profits of the manufacturing industry also support the recovery of manufacturing investment. There is still a large gap in consumption, and the catering industry has not recovered to the same period in 2019. The rapid recovery of overseas economy remains the major driver of the growth of export. Although the growth of import was lower than that of export, it also grew rapidly. Consumer price index and producer price index diverged. CPI remained low, while PPI skyrocketed.

It is estimated that the GDP growth rate in the first quarter of 2021 is expected to reach 20.1%, with an average growth rate of 5.8% compared with the first quarter of 2019, indicating that the overall economic operation has basically recovered. However, the overall recovery is still uneven. Industrial production has recovered above the trend value. Although service production has also recovered rapidly, there is still a gap from the trend value.

Currently, the main challenges encountered by the real economy are: first, the price of bulk commodities continues to rise which squeezes the profits of enterprises. Second, the widening income gap is not conducive to the recovery of consumption. It is suggested to increase supply, remove obstacles and expand transfer payments to low-income groups.

Full report: https://thinktank.phbs.pku.edu.cn/2021/jingjifenxi_0401/23.html