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Economics & Country RiskChina Report

China Economic Forecasts and Risk Ratings

Mainland China’s economic growth soared in the first quarter of 2021, owing to continued recovery and extreme low base effect.

Mainland China’s economy continued to recover in the first quarter of 2021. Real GDP surged 18.3% year on year (y/y) in the quarter, up from 6.5% y/y in the fourth quarter of 2020. The first quarter’s growth marked the highest quarterly year-on-year rate of expansion in mainland China’s quarterly GDP data reporting history. The elevated growth was mostly owing to extreme low base effect, as mainland China’s economic output cratered in the first quarter of 2020, owing to the draconian lockdown to contain the COVID-19 pandemic.

Comparing real GDP of the first quarter of 2021 with that of the pre-pandemic first quarter of 2019, mainland China’s economy grew at a more muted rate of 10.3%, or a compound average annual growth rate of 5.0% over the two years. 

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China’s Near-Term Economic Outlook

  • Mainland China’s economy in the first quarter of 2021 grew at a record pace from 2020, owing to continued economic recovery and extreme low base effect.
  • Industrial sector continued to lead the recovery over the service sector on the supply side, as industrial sector activities are less restricted by pandemic control measures. 
  • The supply-demand gap will keep consumer price inflation pressure at bay, despite rising producer price inflation. The unwinding of mainland China’s stimulus measures should also keep inflation under control.

China real GDP growth, percent change from prior year, historic and forecast, 2018Q1-2025Q4 and consumer inflation

Country Risk Rating for China

The Communist Party of China’s (CPC) long-term policy – the “2035 Long-Range vision” – emphasizes the long-term goal of becoming a “modernized socialist society”, as well as “dual circulation”, which places greater emphasis on developing domestic markets and industries. China’s 2021 goals highlight technological innovation as a “core position” in China’s development strategy. The government’s short-term priority continues to focus on the recovery of key livelihood indicators under the “six guarantees” framework while preventing further waves of coronavirus disease 2019 (COVID-19).


A note on our risk ratings: IHS Markit derives country risk ratings for 206 countries, based on six separate ratings in each country: Political, economic, legal, tax, operational and security with 22 detailed sub-aggregate risks. These ratings allow you to quantify risk with greater specificity with a scoring system based on a 0.1-10 logarithmic scale. Seven risk bands, from low to extreme, allow you to compare and contrast risk between countries and regions.

Experts

Todd C. Lee

Todd is responsible for China's macroeconomic forecast, analysis, research, and risk assessment. Besides China's economic issues, Todd expertise includes macroeconomics, urban and regional economics, and international economic development. As a seasoned and keen China watcher, Todd has years of professional experience assisting multinational corporations navigating China's fast-evolving economic conditions. He accurately forecast China's protracted growth slowdown in the 2010s, which helped clients prepare for a peaked Chinese growth environment. Prior to taking on the role of chief China economist, Todd was an executive director of Global Economics at S&P Global Market Intelligence. Todd joined S&P Global Market Intelligence with the acquisition of Global Insight. He led the Asia Economics Group at Global Insight and was a senior economist at Standard & Poor's DRI.Todd earned a Ph.D. in economics from Brown University and a bachelor's degree in economics from the University of California, Irvine. He is fluent in Chinese.

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Rajiv Biswas

Rajiv previously worked as Director for South-East Asia for The Economist Group. His previous experience includes working for UBS as Executive Director for Asia-Pacific Country Risk and for the Royal Bank of Scotland as an international economist. He has also worked for an international organization, the Commonwealth Secretariat, as a senior economist in the International Capital Markets Department. Rajiv's experience also includes working as a consultant for the United Nations and the Asian Development Bank.Rajiv is a graduate of the London School of Economics, for the B.Sc.Econ. Hons. in Economics, and received his M.Sc. and D.I.C. from Imperial College at London University. Rajiv has published widely on a range of economic, trade and investment related topics, with over 100 published articles. He frequently speaks at international conferences on the global and Asia-Pacific economies, including at World Economic Forum and Euromoney events as well as at United Nations conferences. He regularly appears on international TV programs, including for the BBC, CNBC, Bloomberg, Channel News Asia, CNN and Al Jazeera TV.Rajiv is the author of "Future Asia", published by Palgrave Macmillan in 2013, "Asian Megatrends" published by Palgrave Macmillan in 2016 and "Emerging Markets Megatrends" published by Springer/Palgrave Macmillan in 2018.

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