China’s economy grows in 2020 as virus rebounds – The Diplomat

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In this Oct. 19, 2020 file photo, women eating a snack walk past a Chanel cosmetics store in the popular Capital Mall in Beijing. China’s economy grew 2.3% in 2020 as the recovery from the coronavirus pandemic gathered pace while the United States, Europe and Japan grappled with disease outbreaks.

Credit: AP Photo/Andy Wong, file

China recorded 2.3% economic growth in 2020, likely becoming the only major economy to expand as shops and factories reopened relatively soon after a coronavirus shutdown while the United States, Japan and Europe battled disease outbreaks.

Growth in the three months to December rose to 6.5% from a year earlier, up from 4.9% in the previous quarter and stronger than expected by many forecasters, according to sources. official data released on Monday.

At the start of 2020, activity contracted by 6.8% in the first quarter, as the ruling Communist Party took the then unprecedented decision to shut 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 allowed factories, shops and offices to reopen. .

Exports were boosted by demand for Chinese-made masks and other medical products.

The growing momentum “reflects improving private consumer spending as well as buoyant net exports,” IHS Markit’s Rajiv Biswas 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.

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The economy “recovered steadily” and “standards of living were strongly secured,” the National Bureau of Statistics said in a statement. He said the ruling party’s development goals had been “achieved better than expected”, but gave no details.

The year 2020 saw China’s weakest growth in decades, well below the 3.9% growth rate of the 1990s following the crackdown on the pro-democracy movement in Tiananmen Square, which led to China’s international isolation.

Despite the year’s growth, “it’s too early to conclude that this is a full recovery,” ING’s Iris Pang said in a report. “External demand has not fully recovered yet. It’s a big hurdle. »

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 raising tariffs on Chinese products and manufacturers, including telecoms equipment giant Huawei, and imposing restrictions on access to American components and technology.

“We expect the newly elected US government to continue most 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 to rise this year to over 8%.

Exports rose 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 earlier as demand picked up. Consumer spending exceeded year-ago levels in the quarter ending September.

Online sales of consumer goods rose 14.8% as millions of families ordered to stay home turned to buying groceries and clothes online.

Factory production increased by 2.8% compared to 2019. Activity accelerated towards the end of the year. Production rose 7.3% in December.

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China has reimposed travel controls in some areas after a spate of cases this month, but most of the country is unaffected.

Authorities have called on the public to avoid travel and large gatherings during next month’s Lunar New Year holiday, when millions of people typically visit their hometowns. This could reduce travel, gift and restaurant expenses.

Other activities could increase, however, if farms, factories and traders continue to operate instead of closing for up to two weeks for the holidays, JP Morgan Asset Management’s Chaoping Zhu said in a report.

“Unusually high growth rates in this quarter are likely to be seen,” Zhu said.

Reporting by Joe McDonald for The Associated Press from Beijing, China.

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