BEIJING (AP) – China saw economic growth of 2.3% in 2020, probably becoming the only major economy to expand as shops and factories reopened relatively early after closing to fight coronavirus, while The United States, Japan and Europe have been battling growing infections.
The rise in the three months ending in December rose to 6.5% from a year earlier, as consumers returned to malls, restaurants and cinemas, official figures showed on Monday. It increased by 4.9% compared to the previous quarter and was stronger than many forecasters expected.
At the beginning of 2020, activity contracted by 6.8% in the first quarter, as the ruling Communist Party took the unprecedented step of closing most of its economy to fight the virus. In the following quarter, China became the first major country to grow again, with an expansion of 3.2%, after the party declared victory over the virus in March and allowed factories, shops and offices to reopen.
Restaurants are filling up while cinemas and retailers are struggling to attract customers back. Crowds are thin at malls, where guards check visitors for signs of disease-revealing fever.
Domestic tourism is returning, although authorities have urged the public to stay home during the monthly New Year’s holiday in February, normally the busiest travel season, in response to a number of new infections in some Chinese cities.
Exports were stimulated by demand for masks from China and other medical products.
The growing momentum “reflected improved private consumption spending as well as dynamic net exports,” Rajiv Biswas of IHS Markit said in a report. He said China is likely the only major economy to grow in 2020, while developed countries and most major emerging markets were in recession.
The economy has “steadily recovered” and “living standards have been assured,” the National Bureau of Statistics said in a statement. He said the ruling party’s development goals were “better than expected”, but did not provide details.
2020 was the weakest growth in China in decades and below 3.9% in the 1990s, after the repression of 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 complete recovery,” Iris Pang of ING said in a report. “External demand has not yet fully recovered. This is a big obstacle. ”
High-tech exporters and producers face uncertainty over how President-elect Joseph Biden will resolve conflicts with Beijing over trade, technology and security. His predecessor, Donald Trump, hurt exporters by raising tariffs on Chinese goods and manufacturers, including telecommunications equipment giant Huawei, by imposing restrictions on access to US components and technology.
“We expect the new US government to continue most of China’s current policies, at least in the first quarter,” Pang said.
The International Monetary Fund and private sector forecasters expect economic growth to grow this year and exceed 8%.
China’s rapid recovery has brought it closer to equaling US economic output.
Total activity in 2020 was 102 trillion yuan ($ 15.6 trillion), according to the government. This represents about 75% of the size of the $ 20.8 trillion IMF forecast for the US economy, which is expected to decline by 4.3% from 2019. The IMF estimates that China will be about 90% of the size of the US economy by 2025, although with more than four times more people the average income will be lower.
Exports rose 3.6 percent last year, despite the tariff war with Washington. Exporters took market shares from foreign competitors still facing antivirus restrictions.
Retail spending contracted by 3.9% compared to 2019, but increased by 4.6% in December, a year earlier, as demand rebounded. Consumer spending recovered above the previous year’s levels in the quarter ended in September.
Online sales of consumer goods increased by 14.8%, as millions of families who were ordered to stay home turned to buying food and clothing online.
Factory production increased by 2.8% compared to 2019. Activity accelerated towards the end of the year. Production increased by 7.3% in December.
Despite travel controls imposed on some areas after new cases broke out this month, most of the country is unaffected.
However, the government’s appeal to the public to avoid traditional New Year’s Eve meetings and travel could hinder spending on tourism, gifts and restaurants.
Other activities 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.
“It is likely to see unusually high growth rates this quarter,” Zhu said.
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National Bureau of Statistics (in Chinese): www.stats.gov.cn