BEIJING (AP) – China achieved economic growth of 2.3% in 2020, probably becoming the only major economy to expand, as shops and factories reopened relatively soon since closure to fight coronavirus while the United States, Japan and Europe had trouble increasing infections.
Growth for the three months ending December rose to 6.5% from a year earlier as consumers returned to malls, restaurants and cinemas, according to official data shown on Monday. This was up from 4.9% in the previous quarter and was stronger than many forecasters expected.
In early 2020, activity fell 6.8% during the first quarter, as the ruling Communist Party took the unprecedented step of shutting down most of its economy to fight the virus. The following quarter, China became the first major country to grow again with a 3.2% expansion after the party declared victory over the virus in March and allowed factories, shops and offices to reopen.
Restaurants fill up as cinemas and retailers struggle to attract customers. The crowd is meager in the malls, where guards check visitors for signs of fever revealing the disease.
Domestic tourism is reviving, although authorities have urged the public to stay home during the Lunar New Year holidays in February, usually the busiest travel season, in response to a wave of new infections in some Chinese cities .
Exports have been boosted by demand for Chinese-made masks and other medical products.
The growing momentum “was reflected in improved spending on private consumption and net exports,” Rajiv Biswas of IHS Markit said in a report. He said China is likely to be the only major economy to grow in 2020 while developed countries and most major emerging markets were in recession.
The economy “steadily recovered” and “the standard of living was strongly secured,” the National Bureau of Statistics said in a statement. He said the ruling party’s development goals were “better achieved than expected”, but gave no details.
2020 was China’s weakest growth in decades and below 3.9% in the 1990s after the crackdown on the pro-democracy movement in Tiananmen Square, which led to China’s international isolation.
Despite the growth of the year, “it is too early to conclude that this is a full recovery,” INIS’s Iris Pang said in a report. “External demand has not yet fully recovered. That is a big obstacle. “
Exporters and high-tech manufacturers face uncertainty over how President-elect Joseph Biden will handle conflicts with Beijing over trade, technology and security. His predecessor, Donald Trump, hurt exporters by raising tariffs on Chinese products and manufacturers, including telecommunications equipment giant Huawei, by imposing a brake on access to U.S. components and technology.
“We expect the newly elected U.S. government to continue most current policies on China, at least during the first quarter,” Pang said.
Forecasters from the International Monetary Fund and the private sector expect economic growth to increase this year to over 8%.
China’s rapid recovery brought it closer to the equality of the United States in economic production.
Total activity in 2020 was 102 trillion yuan ($ 15.6 trillion), according to the government. That is, about 75% of the $ 20.8 trillion size projected by the IMF for the U.S. economy, which is expected to decline by 4.3% as of 2019. The IMF estimates that China will be about 90% the size of the U.S. economy by 2025, although with more than four times as many people the average income will be lower.
Exports rose 3.6% last year despite the tariff war with Washington. Exporters gained market share from foreign competitors who still had antivirus restrictions.
Retail spending fell 3.9% from 2019, but rose 4.6% in December, a year earlier, as demand revived. Consumer spending recovered above previous year’s levels in the quarter ended September.
Online sales of consumer goods rose 14.8% as millions of families who were ordered to stay home went on to buy groceries and clothing online.
Factory production increased by 2.8% compared to 2019. Activity accelerated towards the end of the year. Production rose 7.3% in December.
Despite the travel controls imposed in some areas after the creation of new cases this month, most of the country is not affected.
However, the government’s call on the public to avoid traditional lunar New Year’s Eve meetings and trips can hurt spending on tourism, gifts and restaurants.
Another activity could increase, however, if farms, factories and traders continue to operate during the holidays, Chaoping Zhu of JP Morgan Asset Management said in a report.
“Unusually high growth rates are likely to be seen this quarter,” Zhu said.
___
National Statistics Office (in Chinese): www.stats.gov.cn