Despite all the hardships and logistical cartwheels that were caused by the Covid-19 pandemic, China’s economy grew at a faster than expected pace in the fourth quarter of 2020, ending a rough coronavirus-stricken 2020 in remarkably good shape and remained solidly poised to expand further this year.
The country’s GDP expanded roughly 6.5 percent, as seen in recent data that was released by the National Bureau of Statistics. This was faster than the 6.1 percent forecast by economists in a Reuters poll, and followed 4.9 percent growth in the third quarter of 2020.
GDP grew 2.3 percent in 2020, the data showed, making China the one of the rare major economies in the world to avoid a contraction last year as many nations struggled to contain the Covid-19 pandemic.
“The higher-than-expected GDP number indicates that growth has stepped into the expansionary zone, although some sectors remain in recovery,” Xing Zhaopeng, economist at ANZ in Shanghai.
Backed by strict virus containment measures and policy stimulus, the economy has recovered steadily from a steep 6.8 percent slump in the first three months of 2020, when an outbreak of Covid-19 in the central city of Wuhan turned into a full-blown epidemic.
In truth, China’s local consumption and expenditure has lagged during 2020. This is a key driver for the nation’s growth; but the country has managed to prove itself resilient in the export sector, which has helped to drive growth despite the global economic turmoil.
Data last week showed Chinese exports grew by more than expected in December, as coronavirus disruptions around the world fuelled demand for Chinese goods even as a stronger yuan made exports more expensive for overseas buyers.
Despite the good news regarding GDP growth, the disruption caused by the Covid-19 pandemic has left its mark. China’s 2020 GDP growth was the weakest pace in more than four decades. Overall, the slew of brightening economic data has reduced the need for more monetary easing this year, leading the central bank to scale back some policy support, sources told Reuters, but there would be no abrupt shift in policy direction, according to top policymakers.
Analysts expect economic growth to rebound to 8.4 percent in 2021, before slowing to 5.5 percent in 2022.
While this year’s predicted growth rate would be the strongest in a decade, led by a big jump in the first quarter, it is rendered less impressive coming off the low base set in pandemic-stricken 2020.
Some analysts also cautioned that a recent rebound in Covid-19 cases in China could impact activity and consumption in the run-up to next month’s long Lunar New Year holidays.
