China’s economy grows 2.3%, with potentials to overtake U.S. beyond expectations

By Charles Abuede

• Economists expect China to grow output by 8.2% on back of vaccines rollouts

China’s economy witnessed 2.3 per cent growth in 2020 after its gross domestic product (GDP) climbed 6.5 per cent in the fourth quarter of 2020, leaving the second-largest economy in the world to drive growth on the global scene and potentially overtake U.S GDP beyond expectations, recent data from the Chinese Bureau of Statistics has revealed.

The Chinese economy grew back to its pre-pandemic level in the fourth quarter of last year following the quick pick up in business activities by the industrial sector in a bid to meet with growing demand for exports and also striving to achieve its full-year growth as predicted by economic analysts.

The economy, which recorded a V-shaped recovery in the year 2020 despite the global health crisis, attributed its positive growth in 2020 to its ability to control the covid-19 and also deploying fiscal and monetary stimulus as a way to boost investment in the economy. The demand for medical equipment and the demand for devices to aid the work-from-home normal that saw China ship 224 billion masks in nine months (March to December) to other parts of the world also played a significant role in the accelerated growth.

According to the National Bureau of Statistics (NBS) China, there was a 4 per cent fall in consumption spending per capita in 2020 from 2019 levels after it adjusted for inflation. The statistics bureau also revealed that there was a surge in industrial production with China producing more than one billion tonnes of crude steel on an annual record in 2020, while investment in fixed assets such as real estate and infrastructure grew 2.9 per cent.

The Beijing-based statistics office also said that China still has a relatively large room to raise the contribution rate of final consumption to economic growth. The agency stated that for 2021, it is necessary to improve the consumption-ability of residents, improve consumption policy and environment, and cultivate more consumption growth drivers.

Other major highlights from the Chinese GDP report are that industrial output rose 7.3 per cent in December from a year earlier, and 2.8 per cent in 2020; the retail sales growth slowed to 4.6 per cent in December from five per cent in November same year. For the whole of 2020, sales shrank 3.9 per cent, led by an almost 17 per cent drop in catering and restaurants. Also, the fixed-asset investment was 2.9 per cent bigger in 2020 than in 2019.

The economy grew 2.6 per cent on a quarter-on-quarter basis in the final quarter of the year, down from a revised 3 per cent in the July-September period while the unemployment rate was 5.2 per cent at the end of December.

On the other hand, economists have projected that China’s GDP will expand 8.2 per cent in 2021, continuing to outpace global peers even as they begin to recover due to a roll-out of covid-19 vaccines.