China’s economy expands at faster rate than before coronavirus

The Chinese economy grew at a faster rate than before the coronavirus pandemic in the fourth quarter of 2020, official data showed, as industrial production continued to drive the country’s recovery.

Gross domestic product growth beat expectations to reach 6.5 per cent in the final quarter of last year, according to figures released on Monday, with the economy expanding 2.3 per cent over the year, a sharp contrast to the expected performance of other big economies.

The new data underline a rapid turnround in the world’s second-largest economy, which declined in early 2020 for the first time in more than four decades after the country was hit by the pandemic and authorities imposed a harsh lockdown. 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, has lagged behind the industrial sector and added 4.6 per cent in the fourth quarter.

Ning Jizhe, head of the National Bureau of Statistics, said the economy “recovered steadily” last year but added that the “changing epidemic dynamics and external environment pose a multitude of uncertainties”.

The GDP figures, which beat expectations, 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.

The data add to a range of other measures that reflect a booming Chinese economy. This month, the renminbi surpassed 6.5 against the US dollar for the first time since 2018, while China’s 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 Rmb1tn ($154bn) into Chinese stocks and bonds through Hong Kong investments programmes in 2020. 

In China, new cases of Covid-19 slowed to a trickle in the middle of 2020, but a recent outbreak in the northern province of Hebei has prompted a renewed wave of social restrictions and lockdowns. Last week, the country reported its first coronavirus death since April.

Unemployment 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.

Additional reporting by Xinning Liu in Beijing

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