Rolling coverage of the latest economic and financial news
- China’s GDP grew by 6.5% y/y in the fourth quarter, up from 4.9%
- Economy expanded by 2.3% last year – weakest in decades
- Factory growth up 7.3%, but retail sales slow to +4.6%
- Economists: Economic imbalances are worsening
Several analysts are concerned that China’s economy remains unbalanced, as last year’s recovery was driven by factory growth rather than consumption.
Robert Ward of the International Institute for Strategic Studies tweets:
China’s Q4 GDP up 6.5% YoY —>full-year 2020 growth to 2.3%. Optics good for Xi in run-up to July’s CCP 100th anniversary: CN only major economy to grow in 2020, Q4 gives strong statistical hand-off to Q1 print. But structural problems remain, not least reliance on debt for growth
Real GDP expanded by a stronger than expected annual rate of 6.5% in Q4 up from 4.9% in Q3. It meant that for the year as whole, China’s economy was one of the few global economies which recorded positive growth of 2.3%.
It was also encouraging industrial production growth accelerated to an annual rate of 7.3% in December. Consensus forecasts had been looking for a marginal slowdown in the pace of IP growth. However, it was not all good news for China’s economy.
#China Q4/20 GDP +6.5% yoy (+4.9% in Q3)
In December industrial production +7.0% yoy, real retail sales +3.1% (our own estimate).
Recovery continues, but imbalances continue to worsen. This year should see clear clampdown on indebtedness, real estate investment etc. Hopefully. pic.twitter.com/WFeb0OVxa8
China’s economy is now growing faster than before the pandemic, points out the Financial Times:
The Chinese economy grew 6.5 per cent in the fourth quarter of 2020, a faster rate than before the coronavirus pandemic that easily outpaced the expected performance of other big countries.
Gross domestic product growth for the final quarter beat expectations, according to official data released on Monday, with the Chinese economy expanding 2.3 per cent for the full year as industrial production continued to drive the country’s recovery.
“China has more than returned to trend growth,” said Raymond Yeung, chief economist for Greater China at Australia and New Zealand Banking Group. The strong rebound means authorities can “prioritize structural reforms rather than economic reflation” in 2021, he said.
The V-shaped recovery was based on successful control of Covid cases and fiscal and monetary stimulus which boosted investment in real estate and infrastructure. Growth was further spurred by overseas consumer demand for medical equipment and work-from-home devices, with exports expanding 3.6% in 2020 compared to the previous year.
That made the country the only major economy in the world to eke out an expansion, while others, facing a voracious virus onslaught, contracted.
China’s accelerating economic rebound, largely owing to the government’s drastic measures to contain the virus, will help boost the confidence of all other economies where a resurgence of infection cases is still taking tolls.
China’s #GDP topped 100 tln yuan for first time, reaching 101.59 tln yuan with 2.3% y-o-y expansion in 2020, said NBS official on Mon. It is estimated to account for 17% of global total for the year, with #China expected to become only major economy with positive growth in 2020. pic.twitter.com/hKVeXNXo8N