The Chinese economy has grown 6.5 per cent in the fourth quarter of 2020 compared to Q4 2019, making it one of the few countries in the world to record positive growth for the year.
It is growing at a faster rate than before the coronavirus pandemic, which has seen the economies of all countries bar China retract. Its economy is tipped to expand even further this year.
Gross domestic product (GDP) increased 6.5 per cent year on year in the fourth quarter, data from the National Bureau of Statistics showed on Monday, following the third quarter’s growth of 4.9 per cent. The data showed that GDP grew 2.3 per cent in 2020, making China the only major economy in the world to avoid a contraction last year as nations worldwide struggled to contain the coronavirus pandemic. Economists are forecasting China’s GDP will expand at its fastest pace in a decade at 8.4 per cent, according to a Reuters poll.
"The higher than expected GDP number indicates that growth has stepped into the expansionary zone, although some sectors remain in recovery," said Xing Zhaopeng, China Markets Economist at ANZ in Shanghai.
"Policy exiting will pose countercyclical pressures on 2021 growth."
The new data underlined a rapid turnaround in China’s economy, which declined in early 2020 for the first time in more than four decades after authorities imposed an extensive lockdown to stem the spread of COVID-19. In the fourth quarter of 2019, China grew 6 per cent. The subsequent recovery was powered by higher industrial production, which benefited from state support and added 7.1 per cent in the fourth quarter, compared with 5.8 per cent in the previous quarter. Retail sales, a measure of consumer appetite, have lagged behind the industrial sector and added 4.6 per cent in the fourth quarter.
Ning Jizhe, head of China’s National Bureau of Statistics, told the Financial Times the economy "recovered steadily" last year, but added that the "changing epidemic dynamics and external environment pose a multitude of uncertainties".
The GDP figure came days after China recorded its highest ever monthly trade surplus in December, stoked by three consecutive months of double digit exports growth. Exports rose 18 per cent last month compared with the same period in the previous year.
China’s economy is booming. Its stock market reached its highest level since the global financial crisis. The country’s return to growth last year attracted strong appetite from foreign investors, who funnelled about US$154 billion into Chinese stocks and bonds through Hong Kong investments programs in 2020. The official unemployment rate in China was 5.2 per cent in December, unchanged from a month earlier. Fixed asset investment added 2.9 per cent over the full year, while real estate investment jumped 7 per cent.