China’s economy steadily picked up pace after an historic contraction in the first quarter of last year, recovering all its lost ground by the end of September. The rebound has been led by strong industrial output and robust exports as the pandemic fueled demand for Chinese-made medical goods and electronic devices.

“We are seeing a bit more balanced recovery in the Chinese economy,” Wang Tao, chief China economist at UBS AG, said in an interview with Bloomberg TV. As policy starts to normalize, property and infrastructure investment are set to slow in the next few quarters, she said. “So that early pickup in construction industry is going to give way to more household consumption,” she said.

China’s benchmark CSI 300 Index erased an earlier loss of as much as 0.6%. China’s 10-year government bond futures also reversed earlier losses to rise as much as 0.1% while the yield on benchmark 10-year sovereign debt fell one basis point to 3.165%. The onshore yuan lost 0.17%, the first drop this week, to 6.5329 per dollar.

Bumper GDP growth, rising inflation and soaring debt levels have put policy makers on guard. Beijing has signaled it wants to scale back fiscal and monetary stimulus now that the recovery is gathering pace, and is tightening regulatory oversight in areas such as lending and real estate. The central bank has asked banks to curtail loan growth in coming months, though officials have stressed a gradual tapering of policy.

Globally, the rollout of vaccines is helping to bolster the world economy and underpinning China’s growth. On top of that, the Biden administration’s massive fiscal stimulus is expected to have huge spillovers for the rest of the world, especially in China, the world’s biggest exporter. Bloomberg Economics’ Chang Shu upgraded her growth forecast for China for this year to 9.3% from 8.2% previously. The government’s official target is for growth above 6% this year.