UBS raises China GDP call to 9% as Biden stimulus drives exports

China’s economy will grow even faster than initially expected in 2021, driven by a strong rebound in the domestic economy and U.S. stimulus that should drive demand for Chinese exports, UBS Group AG economists forecast.

The world’s second-largest economy will expand 9% this year, they estimated Tuesday, faster than their earlier forecast of 8.2%. If achieved, that would be the quickest growth in a decade, and would bring forward the time when China’s economy surpasses America’s in size.

“Despite additional mobility restrictions around the CNY holiday period that weakened travel and tourism, China’s overall economic activities were stronger than expected, thanks in part to more working days and robust export demand,” Chief China Economist Wang Tao and others wrote in the report.

“We see domestic consumption rebounding 10% in real terms, which, together with stronger exports, should help support corporate capex, even as infrastructure and property investment slow,” they said.

Gross domestic product will likely expand more than 19% this quarter compared to the first three months of 2020, when the nation was in lockdown, they wrote.