Chinese economy accelerates in Q4, ends 2020 fit after COVID-19 shock


BEIJING, Jan.18 (Reuters) – China’s economy accelerated in the fourth quarter, with growth exceeding expectations as it ended a coronavirus-stricken 2020 in remarkably good shape and remained poised for develop further this year even as the global pandemic raged relentlessly.

Gross domestic product rose 2.3% in 2020, official data showed on Monday, making China the only major economy in the world to avoid a contraction last year as many countries struggled to contain the pandemic of COVID-19. And China is expected to continue to dominate its peers this year, with GDP expected to grow at the fastest rate in a decade at 8.4%, according to a Reuters poll.

The world’s second-largest economy surprised many with how quickly it recovered from the coronavirus shock, especially as policymakers have also had to contend with strained U.S.-China relations over trade and on d ‘other fronts.

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Beijing’s strict virus restrictions have allowed it to largely contain the COVID-19 outbreak much faster than most countries, as policy stimulus measures led by the government and local manufacturers ramp up production to Providing goods to many countries crippled by the pandemic also helped build momentum.

GDP grew 6.5% year-on-year in the fourth quarter, according to data from the National Bureau of Statistics, faster than the 6.1% predicted by economists in a Reuters poll, and followed the solid growth of 4 , 9% of the third trimester.

“The higher than expected GDP figure indicates that growth has entered the expansion zone, although some sectors are still recovering,” Xing Zhaopeng, economist at ANZ in Shanghai.

“Exiting politics will put countercyclical pressures on growth in 2021.”

Supported by strict virus containment measures and political stimulus measures, the economy has steadily recovered from a sharp 6.8% drop in the first three months of 2020, when a COVID-outbreak 19 in the central city of Wuhan has turned into a full-fledged epidemic.


Asia’s economic powerhouse has been fueled by a surprisingly resilient export sector, but China’s consumption – a key driver of growth – has fallen behind expectations amid fears of a resurgence of cases of COVID-19.

Data from last week showed Chinese exports increased more than expected in December, as coronavirus disruptions around the world fueled demand for Chinese goods even as a stronger yuan made exports more expensive for foreign buyers. Read more

Still, highlighting the massive impact of COVID-19 around the world, China’s GDP growth in 2020 marked its slowest pace since 1976, the last year of the decade-long Cultural Revolution that destroyed China. economy.

Overall, the clearing set of economic data has reduced the need for further monetary policy easing this year, leading the central bank to cut some policy support, sources told Reuters, but it there would be no sudden change in policy direction, according to key decision-makers.

On a quarterly basis, GDP grew 2.6% in October-December, the office said, compared to expectations of a 3.2% increase and a revised upward gain of 3.0. in the previous quarter.

Residential buildings under construction and a power plant are seen near the central business district (CBD) in Beijing, China on January 15, 2021. Photo taken on January 15, 2021.

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Highlighting weakness in consumption, retail sales fell 3.9% last year, marking the first contraction since 1968, according to NBS records. Retail sales growth in December missed analysts’ forecasts and fell to 4.6% from 5.0% in November, as sales of clothing, cosmetics, telecommunications and autos slowed.

However, China’s vast manufacturing sector has continued to gain momentum, with industrial production increasing at a faster-than-expected rate of 7.3% last month compared to a year ago, reaching its highest level since March 2019.


Ning Jizhe, head of China’s statistics bureau, said in a briefing that there will be many favorable conditions to support China’s economic recovery in 2021.

This year marks the start of China’s 14th Five-Year Plan, which policymakers see as vital to pushing the economy past the so-called “middle-income trap.”

China still faces many challenges, including tensions between Beijing and Washington and their development under the new US administration led by President-elect Joe Biden. In addition, rising labor costs, an aging population and a recent surge in defaults are adding to the risks for an economy that is still trying to reduce a mountain of debt.

“We must be attentive to the following problems in 2021: first, the imbalance of the economic recovery. Compared to investment and exports, consumption is generally low and has not yet returned to normal levels”, Beijing chief economist Wang Jun said. Zhongyuan Bank.

“The second is the problem of excessive and rapid credit crunch.”

The central bank is poised to keep its policy rate unchanged over the next few months while piloting a steady slowdown in credit expansion in 2021, political sources have said.

The Chinese Academy of Social Sciences, a government think tank, sees the macro leverage ratio jump from around 30 percentage points in 2020 to over 270%.

While the expected growth rate of over 8% this year would be the strongest in a decade, led by a double-digit expansion expected in the first quarter, it is made less impressive after the weak base set in 2020.

Some analysts have also warned that a recent rebound in COVID-19 cases in the northeast of the country could impact activity and consumption as the long Lunar New Year holiday nears next month. Read more

“The control of the flow of people has started, so the risk of a generalized Covid epidemic should be low,” said Iris Pang, ING chief economist for China.

“But the risk of a technology war between China and certain economies remains if the United States does not remove certain measures.”

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Reporting by Gabriel Crossley and Kevin Yao Editing by Shri Navaratnam

Our Standards: Thomson Reuters Trust Principles.


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