China Reports 2.3% Growth in 2020, But Challenges Remain for 2021 By

© Reuters.

By Gina Lee – The Chinese economy reported growth in 2020, as it controlled the COVID-19 outbreak in the country and positioned itself as the only major country to report economic growth.

Data from the National Bureau of Statistics released earlier in the day showed that grew 7.3% year-on-year in December, above the 6.9% in forecasts prepared by, and the 7% growth seen in November, according to data released earlier in the day.

The data also showed that GDP rose 6.5% in the fourth quarter, above the forecast 6.1% growth and the 4.9% growth in the third quarter. However, the GDP grew 2.6% , below the forecast 3.2% and the 2.7% growth seen during the previous quarter.

Fiscal and monetary stimulus from the government that boosted investment in infrastructure and real estate boosted early recovery. Chinese exports such as medical equipment and work-from-home devices also saw strong overseas demand as the COVID-19 outbreak was brought under control and factories resumed production. This demand is expected to remain strong, with lockdowns and restrictive measures still in place in many countries.

Some investors struck an optimistic note.

“The quarter really seems to have shown the economy ended the year on a strong note, manufacturing is doing well,” CCB International Holdings Ltd. head of macro research Cui Li told Bloomberg.

Economists widely expect China’s GDP to expand 8.2% in 2021, continuing to outpace global peers, even as other large economies begin their recoveries as COVID-19 vaccinations are rolled out.

However, China has recently seen cooler-than-expected weather and a resurgent outbreak of COVID-19 cases in the northeastern part of the country. The National Health Commission reported 109 new COVID-19 cases for Jan. 17.

“The Chinese economy accelerated to a strong finish to 2020, though challenges at the start of 2021 could put a damper on growth,” Bloomberg chief Asia economist Chang Shu said.

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