Commentary: Why China’s growth in 2021 will likely fall short of market expectations

In the second quarter of 2021, China’s GDP grew by 7.9 per cent year-on-year. That was a relatively strong performance, especially given the enduring effects of the COVID-19 pandemic on the global economy.

But, for China, it represents a disappointment: a Caixin survey of economists showed the median estimate for the second quarter was 8.2 per cent growth. Chinese economists broadly agree that China’s potential growth rate is 6 per cent. So, taking into consideration the base effect, China’s year-on-year growth rate in the four quarters of 2021 should be 19.1 per cent, 8.3 per cent, 6.7 per cent, and 5.5 per cent. Yet, in the first quarter, growth amounted to 18.3 per cent. This weaker-than-expected performance is, to a significant extent, a result of official policy.

Read more