(Yicai Global) May 18 -- Growth has slowed in some parts of the economy, data released by the National Bureau of Statistics showed. But that is largely due to the weakening effect of the low base of comparison from last year, and the overall recovery momentum is still strong, according to economists polled by Yicai Global.

The added value of the country’s large industrial enterprises had jumped by an average 6.8 percent over two years as of last month, 0.6 percentage point higher than March’s gain, the NBS data showed yesterday. The service sector continued to grow, with the business activity index in the expansion range for 14 consecutive months. Total retail sales of consumer goods, investment in fixed assets, and total imports and exports of goods continued to grow at a double-digit rate from a year earlier.

Generally, the economic recovery trend has not changed, but the international situation is still complicated, the global pandemic is still spreading and the prospects for the world’s economic recovery remain uncertain, Fu Linghui, a spokesperson for the NBS, said at a press conference.

Strong overseas demand has been a key factor in China's economic recovery since the second quarter of last year, and domestic service and consumer demand has been recovering rapidly.

Total retail sales of consumer goods amounted to CNY3.32 trillion (USD515 billion) last month, up 17.7 percent from the same period last year and 0.32 percentage points higher than the previous month. The figure was CNY13.8 trillion from January to last month, up 29.6 percent, and the two-year average growth rate was 4.2 percent, per the NBS statistics.

Consumer goods sales slowed last month from March, but that was mainly because of the comparison base from last year, Zheng Houcheng, head of the research institute under Yingda Securities, said in an interview with Yicai Global. Also, 15 sub-categories reported growth, indicating that the nation’s consumer demand is still increasing, Zheng noted.

The growth rate of consumer expenditure is lagging that of incomes, which is partly because people have been prudent with their spending amid the global pandemic and the uncertainties it has caused, said Wang Jinbin, deputy dean of the School of Economics at Renmin University of China. But the increase in national household income means there is potential for a steady increase in consumption, Wang said.

Surging commodity prices have drawn the attention of top government officials, Fu said, as that will boost raw material costs in some of China’s upstream industries. That will subsequently put pressure on some downstream companies.

China must analyze the situation in the domestic and foreign markets and make adjustments to deal with high commodity prices, Premier Li Keqiang emphasized at an executive meeting of the State Council.

That shows the government is concerned, said Gan Hongliang, an analyst at Doto Futures’ research institute, who noted that the prices of commodities such as copper and crude oil have been rising since May last year and the increase has been faster this year, causing market concerns about inflation.

Inflationary pressures intensified last month, with the producer price index and consumer price index both climbing, according to NBS statistics. The PPI rose 6.8 percent from March, while the CPI gained 0.9 percent.

But Fu said the effect of increases in the PPI on CPI will gradually decrease, adding that the growth rate of many demand indexes has not yet returned to the level before the pandemic. The overall recovery of production supply has been solid, and the supply-demand relationship does not support substantial growth in prices, Fu said, so the CPI should remain stable this year.

Rising global commodity prices may boost China's PPI for a period of time, but the risk of imported inflation is generally under control, according to the China Monetary Policy Implementation Report for the First Quarter of 2021, issued by the People’s Bank of China on May 11.

Editor: Tom Litting