BEIJING (AP) – China achieved 2.3% economic growth in 2020 and is likely to be the only major economy to expand as stores and factories reopened relatively early due to a strike to fight the coronavirus, while the United States, Japan and Europe have struggled with increasing infections.
Growth in the three months ending in December rose to 6.5% more than a year earlier when consumers returned to shopping malls, restaurants and theaters, official data showed on Monday. It was higher than the previous quarter’s 4.9% and stronger than many forecasters expected.
Early in 2020, activity shrank by 6.8% in 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 reopened factories, shops and offices.
Restaurants are filling up while cinemas and retailers are struggling to attract customers. The crowd is thin at shopping malls, where guards watch visitors for signs of the disease’s fever.
Domestic tourism is recovering, although authorities have urged the public to stay home during the lunar New Year holiday in February, usually the busiest travel season, in response to a spate of new infections in some Chinese cities.
Exports were boosted by demand for Chinese-made masks and other medical goods.
The growing momentum ‘reflects the improvement in private consumption expenditure as well as live net exports’, Rajiv Biswas of IHS Markit said in a report. He said China was likely to be the only major economy to grow in 2020, while developed countries and most emerging markets were in a recession.
The economy has “gradually recovered” and “living standards are strongly assured”, the National Bureau of Statistics said in a statement. The ruling party’s development goals are said to have been “achieved better than expected”, but contain no details.
2020 was China’s weakest growth in decades and under the 1990s by 3.9% after opposition to the Tiananmen Square pro – democracy movement, which led to China’s international isolation.
Despite the growth for the year, “it is too early to conclude that it is a full recovery,” said Iris Pang of ING in a report. “The external demand has not yet fully recovered. This is a major obstacle. ”
Exporters and high-tech manufacturers are faced with uncertainty over how President-elect Joseph Biden will handle conflicts with Beijing over trade, technology and security. Its predecessor, Donald Trump, hurt exporters by raising tariffs on Chinese goods and manufacturers, including telecommunications giant Huawei, by restricting access to U.S. components and technology.
“We expect the newly elected US government to continue most of the current policy on China, at least for the first quarter,” Pang said.
The forecasters of the International Monetary Fund and the private sector expect economic growth to rise further to above 8% this year.
China’s rapid recovery has brought it closer to agreement with the United States in economic production.
According to the government, total activity in 2020 was 102 trillion yuan ($ 15.6 trillion). This is about 75% as large as the IMF’s forecast for the US economy of 20.8 billion dollars, which is expected to shrink by 4.3% from 2019. The IMF estimates China will be about 90% of the US economy by 2025. but 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 have taken market share from foreign competitors who were still struggling with antivirus restrictions.
Retail spending shrank by 3.9% in 2019, but rose by 4.6% in December more than a year earlier as demand revived. Consumer spending recovered in the quarter ended September to above previous year’s levels.
Online consumer goods sales rose 14.8% as millions of families ordered to stay at home bought groceries and clothing online.
Factory production increased by 2.8% compared to 2019. Activity accelerated towards the end of the year. Production rose by 7.3% in December.
Despite the travel controls imposed in some areas after new cases flared up this month, most of the country is untouched.
Still, the government’s appeal to the public to avoid traditional lunar New Year events and travel can no longer be spent on tourism, gifts and restaurants.
However, other activities could increase if farms, factories and traders continue to work during the holidays, said Chaoping Zhu of JP Morgan Asset Management in a report.
“Unusually high growth rates in this quarter are likely to be seen,” Zhu said.
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National Bureau of Statistics (in Chinese): www.stats.gov.cn