BEIJING (AP) – China achieved economic growth of 2.3% in 2020 and is likely to be the only major economy to grow as stores and factories reopened relatively early after a closure to combat the coronavirus, while the United States, Japan and Europe faced increasing infections.
Growth in the three months ending December rose to 6.5% from a year earlier as consumers returned to malls, restaurants and movie theaters, official data showed Monday. That was higher than last quarter’s 4.9% and stronger than many forecasters had expected.
In early 2020, activity contracted by 6.8% in the first quarter as the ruling Communist Party took the then unprecedented move to shut down most of its economy to fight the virus. The following quarter, China became the first major country to grow again, growing 3.2% after the party declared victory over the virus in March and allowed factories, shops and offices to reopen.
Restaurants fill up while movie theaters and retailers struggle to attract customers back. Crowd is thin in malls, where security guards monitor visitors for signs of the disease’s telltale fever.
Domestic tourism is reviving, although authorities have urged the public to stay at home during the February Lunar New Year holidays, normally the busiest travel season, in response to a wave of new infections in some Chinese cities.
Exports were boosted by the demand for Chinese-made masks and other medical supplies.
The growing momentum “reflected the improvement in private consumer spending and strong net exports,” IHS Markit’s Rajiv Biswas said in a report. He said China will likely 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 “living standards were vigorously assured,” the National Bureau of Statistics said in a statement. It said the ruling party’s development goals had been “achieved better than expected,” but did not provide details.
2020 was China’s weakest growth in decades and below 3.9% of the 1990s following the crackdown on the pro-democracy movement in Tiananmen Square that led to China’s international isolation.
Despite the growth for the year, “it is too early to conclude that this is a full recovery,” said ING’s Iris Pang in a report. “External demand has not fully recovered yet. This is a major hurdle. “
Exporters and high-tech manufacturers face uncertainty about how President-elect Joseph Biden will deal with conflicts with Beijing over trade, technology and security. Its predecessor, Donald Trump, hurt exporters by raising tariffs on Chinese goods and manufacturers, including telecom giant Huawei, by restricting access to US components and technology.
“We expect the newly elected US government to continue most of its current policy towards China, at least for the first quarter,” said Pang.
The International Monetary Fund and private sector forecasters expect economic growth to rise further this year to above 8%.
China’s rapid recovery brought it closer to matching the economic output of the United States.
According to the government, total activity in 2020 was 102 trillion yuan ($ 15.6 trillion). That’s about 75% of the size of the $ 20.8 trillion that the IMF predicts for the US economy, which is projected to shrink by 4.3% from 2019. The IMF estimates that China will be about 90% of its size by 2025. of the US economy. with more than four times as many people, however, the average income will be lower.
Exports rose 3.6% last year despite the tariff war with Washington. Exporters took market share from foreign competitors who continued to face antivirus restrictions.
Retail spending fell 3.9% in 2019, but increased 4.6% in December from a year earlier when demand picked up again. Consumer spending rebounded to above last year’s level in the quarter ending in September.
Online sales of consumer goods increased 14.8% as millions of households forced to stay at home switched to buying groceries and clothes online.
Factory production increased by 2.8% in 2019. Activity accelerated towards the end of the year. Production increased by 7.3% in December.
Despite travel controls imposed for some areas after new cases flared up this month, most of the country is untouched.
Still, the government’s call to the public to avoid traditional lunar New Year gatherings and travel can reduce spending on tourism, gifts and restaurants.
However, other activity could increase if farms, factories and merchants continue to operate during the holidays, Chaoping Zhu of JP Morgan Asset Management said in a report.
“Unusually high growth rates in this quarter are likely to be seen,” said Zhu.
___
National Bureau of Statistics (in Chinese): www.stats.gov.cn