China’s economy grew faster than forecast in the December quarter as it ended the COVID-hit year solidly poised to further add to that growth in 2021.
GDP rose 6.5% year-on-year in the fourth quarter, according to the country’s National Bureau of Statistics.
That was much stronger than the 6.1% forecast by economists and well up on the 4.9% growth in the third quarter.
It was also considerably faster growth than the 6.0% recorded in the final, pre-COVID quarter of 2019, which tells you just how strong was the rebound in the world’s second biggest economy in the final months of 2020.
GDP grew 2.3% in 2020, the data showed, making China the only major economy in the world to avoid a contraction last year as the rest struggled to contain the COVID-19 pandemic.
But because of COVID, 2020’s full year growth was the weakest pace in more than four decades.
China reported GDP growth of 6.0% for 2019 (revised in December from the first reported 6.1%).
GDP in the final three months of the year has rebounded strongly from the massive 6.8% slump in the first three months of 2020, when the pandemic and associated lockdowns flattened the economy and activity.
Surveys forecast that growth will rise to 8.4% this year before easing to a 5.5% rate in 2022.
On a quarter-on-quarter basis, GDP rose 2.6% in October-December, the bureau said, compared with forecasts for a 3.2% rise and slower than the revised 3.0% gain in the September quarter.
But while exports surged last year and the trade surplus topped half a trillion dollars for the first time in three years, household consumption remained weak (high food prices because of a pork shortage for most of 2020 and much of 2019 hasn’t helped).
Because of the March quarter plunge, retail sales fell 3.9% last year, marking the first contraction since 1968.
And the problem persisted in the closing months of 2020 with retail sales growth in December eased to 4.6% from November’s 5.0%, as sales of garments, cosmetics, telecoms and autos slowed.
China’s vast manufacturing sector continued to gain momentum, with industrial output rising for the 9th month in a row at a faster-than-expected rate of 7.3% last month from a year ago, hitting the highest pace since March 2019.
Fixed asset investment rose a weak 2.9% in 2020 on year, compared with a forecast 3.2% increase but a bit better than the 2.5% growth rate in the 11 months to November.
And there is one worry on the horizon – more COVID cases in the industrialised north of the country.
China reported more than 100 new COVID-19 cases for the sixth consecutive day, with rising concern of another national wave ahead of the Lunar New Year holidays starting on Friday, February 12.
This new outbreak is almost a week old and despite tight lockdowns on nearly 30 million people in and around two cities near Wuhan, cases keep popping up.
