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BEIJING (AP) – China recorded 2.3% economic growth in 2020, likely becoming the only major economy to thrive as stores and factories reopened relatively soon after a shutdown to fight the coronavirus while the United States, Japan and Europe were battling the rise in infections.
Growth in the three months ending December rose to 6.5% from a year earlier as consumers returned to malls, restaurants and cinemas, official data showed on Monday. This was up from 4.9% the previous quarter and more than many forecasters expected.
In early 2020, activity contracted 6.8% in the first quarter, as the ruling Communist Party took the then 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 authorized the reopening of factories, stores and offices.
Restaurants fill up as movie theaters and retailers struggle to attract customers. Crowds are rare in shopping malls, where guards check visitors for signs of fever indicative of the disease.
Domestic tourism is resuming, although authorities have urged the public to stay at home during the Lunar New Year holidays in February, normally the busiest travel season, in response to a wave of new infections in some Chinese cities.
Exports were boosted by demand for Chinese-made masks and other medical products.
The growing momentum “reflected improving private consumption spending as well as strong net exports,” Rajiv Biswas of IHS Markit said in a report. He said China would likely be the only major economy to grow in 2020, as developed countries and most major emerging markets were in recession.
The economy “has recovered steadily” and “the standard of living has been strongly assured,” 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 following the crackdown on the Tiananmen Square pro-democracy movement, 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,” ING’s Iris Pang said in a report. “External demand has not yet fully recovered. It’s a big obstacle. “
High-tech exporters and manufacturers face uncertainty over how President-elect Joseph Biden will handle disputes with Beijing over trade, technology and security. His predecessor, Donald Trump, hurt exporters by increasing tariffs on Chinese products and manufacturers, including telecommunications equipment giant Huawei, by placing restrictions on access to US components and technology.
“We expect the newly elected US government to maintain most of the current policies on China, at least for the first quarter,” Pang said.
The International Monetary Fund and private sector forecasters expect economic growth to continue rising this year to exceed 8%.
China’s rapid recovery has brought it closer to the equalization of economic output 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 account for about 90% of the economy. size of the U.S. economy by 2025, but with more than four times as many people, average income will be lower.
Exports grew 3.6% last year despite the tariff war with Washington. Exporters took market share from foreign competitors who still faced anti-virus restrictions.
Retail spending contracted 3.9% from 2019, but rose 4.6% in December from a year ago as demand picked up. Consumer spending returned to above levels a year earlier in the quarter ending September.
Online sales of consumer goods rose 14.8% as millions of families who were ordered to stay home turned to grocery shopping and clothing on the internet.
Industrial production rose 2.8% compared to 2019. Activity picked up towards the end of the year. Production rose 7.3% in December.
Despite travel checks imposed in some areas after new cases erupted this month, most of the country remains unaffected.
Still, the government’s call for the public to avoid traditional Lunar New Year gatherings and trips could reduce spending on tourism, gifts and restaurants.
Another activity could increase, however, if farms, factories and traders continue to operate during the holidays, JP Morgan Asset Management’s Chaoping Zhu said in a report.
“Unusually high growth rates during this quarter are likely to be seen,” Zhu said.
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National Bureau of Statistics (in Chinese): www.stats.gov.cn
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