BEIJING (AP) – China achieved 2.3% economic growth in 2020, probably becoming the only major economy to expand as stores and factories reopened relatively early from a closure to combat the coronavirus, while the United States, Japan and Europe struggled to increase infections.
Growth in the three months ending in December rose to 6.5% from the previous year, as consumers returned to shopping malls, restaurants and cinemas, official data showed on Monday. This was above 4.9% in the previous quarter and stronger than many analysts had expected.
In early 2020, activity declined by 6.8% in the first quarter, when the ruling Communist Party took the unprecedented step of shutting down most of its economy to fight the virus. In 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, stores and offices to reopen.
Restaurants are filling up as cinemas and retailers struggle to attract customers back. Crowds are thinning in shopping malls, where guards check on visitors for signs of the fever that reveals the disease.
Domestic tourism is reviving, although officials have urged the public to stay home during the Lunar New Year holiday in February, usually the busiest travel season, in response to a wave of new infections in some Chinese cities.
Exports were driven by demand for Chinese masks and other medical products.
The growth momentum “reflected improved private consumption spending as well as fluctuating net exports,” said Rajiv Biswas of IHS Markit 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 are in recession.
The economy “has rebounded steadily” and “living standards have been vigorously guaranteed,” the National Bureau of Statistics said in a statement. He said the ruling party’s development goals were “accomplished better than expected”, but gave no details.
2020 was China’s weakest growth in decades and below 3.9% in 1990, following the crackdown on the pro-democracy movement in Tiananmen Square, which led to China’s international isolation.
Despite the growth in the year, “it is too early to conclude that this is a full recovery,” said Iris Pang of ING in a report. “External demand has not yet fully recovered. This is a major obstacle. “
High-tech exporters and manufacturers face uncertainties about 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 restrictions on access to U.S. components and technology.
“We expect the newly elected United States government to continue most current policies for China, at least during the first quarter,” said Pang.
The International Monetary Fund and private sector analysts expect economic growth to rise further this year, to more than 8%.
China’s rapid recovery brought it closer to economic production in the United States.
Total activity in 2020 was 102 trillion yuan ($ 15.6 trillion), according to the government. This is about 75% of the size of the $ 20.8 trillion forecast by the IMF for the US economy, which is expected to shrink 4.3% from 2019. The IMF estimates that China will be about 90% of the size of the US economy in 2025, although with more than four times as many people, the average income will be lower.
Exports increased by 3.6% last year, despite the tariff war with Washington. Exporters gained market share from foreign competitors who still faced antivirus restrictions.
Retail spending contracted 3.9% compared to 2019, but increased 4.6% in December compared to the previous year, as demand revived. Consumer spending recovered above the levels of the previous year in the quarter ended in September.
Online sales of consumer goods increased by 14.8% as millions of families who were forced to stay at home started buying groceries and clothes on the Internet.
The factory’s production increased 2.8% compared to 2019. Activity accelerated at the end of the year. Production grew 7.3% in December.
Despite travel controls imposed in some areas after new cases occurred this month, most of the country was unaffected.
Still, the government’s plea to the public to avoid traditional Lunar New Year meetings and travel can hurt spending on tourism, gifts and restaurants.
Other activities may increase, however, if farms, factories and traders continue to operate during the holiday, Chaoping Zhu of JP Morgan Asset Management said in a report.
“Exceptionally high growth rates are likely to occur this quarter,” said Zhu.
___
National Bureau of Statistics (in Chinese): www.stats.gov.cn