SHANGHAI–China, the world’s second largest economy, registered GDP growth of 2.3 percent year on year, the National Bureau of Statistics said on Monday. It’s the lowest growth since in over four decades since the Cultural Revolution and a significant drop from the 6 percent in 2019, although momentum in the fourth quarter was stronger than expected.
The last quarter grew 6.5 percent, building on the 4.9 percent expansion achieved in the third quarter and 3.2 percent in the second quarter.
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Retail sales came to 39.2 trillion renminbi, $6.05 trillion last year a decline of 3.9 percent overall. The sector showed a positive trend in the fourth quarter with retail sales accelerating 4.9 percent year over year. Online sales in 2020 grew by 15 percent and now represent a quarter of total retail sales, leaping from the 4 percent share it had in 2019.
China is the only major economy expected to avoid a recession in 2020 after it managed to recover relatively quickly from the COVID-19 crisis. On the back of these new figures, Credit Suisse revised its China GDP forecast for this year up to 7.1 percent from 5.6 percent. On Jan. 8, the International Monetary Fund said it expected China’s economy to grow 7.9 percent in 2021.
“We see a strong recovery in retail sales and a pleasantly surprising surge in exports. China’s exports, which have been resilient amid the global recession, will receive a further boost from an anticipated global economic recovery following the successful administration of vaccines,” said Edmond Huang, head of Hong Kong and China Research, Credit Suisse.
Despite the promising V-shaped recovery thus far, the Chinese government has been asking the public to remain vigilant and has been working hard to keep COVID-19 case clusters under control ahead of Lunar New Year. The holiday, which begins, on Feb. 10 is not only the busiest travel period of the year with city workers returning to their hometowns but a key spending period.
Last week, China implemented some of the strictest lockdown measures since the country’s height of the pandemic last year. Shijiazhuang, the capital of Hebei province which encircles Beijing, was put on lockdown after 39 cases appeared. Large lockdown measures and rapid mass testing has also been rolled out in nearby northern provinces of Heilongjiang and Jilin, as well as in one district in Beijing.