* GDP growth of 6.5% in Q4; consensus: + 6.1%
* Growth in 2020 stands at 2.3%, the lowest in four decades
* The rebound of the economy should accelerate this year
by Gabriel Crossley and Kevin Yao
BEIJING, Jan. 18 (Reuters) – China’s economy grew at a faster pace than expected in the fourth quarter of 2020, confirming that it has recovered from the disastrous impact of the health crisis and moving towards a even stronger growth this year despite the effects of the coronavirus pandemic around the world.
The reestablishment of the world’s second-largest economic power after the dip caused at the start of last year by the health crisis surprised many observers, especially with the other challenges facing decision-makers in Beijing, foremost among them trade tensions with United States.
By imposing strict containment measures, China has succeeded in bringing the coronavirus epidemic under control faster than many other countries, while the support measures deployed by the government and the increase in production of local manufacturers to supply countries paralyzed by the health crisis contributed to a positive dynamic.
Official data released on Monday shows that China’s gross domestic product (GDP) grew over the October-December period by 6.5% year-on-year, while economists polled by Reuters expected an average increase of 6.1 % after 4.9% growth in the third quarter of 2020.
For the whole of 2020, GDP grew by 2.3%, according to data from the National Bureau of Statistics (SNB), making China the only major economic power to have experienced a contraction last year as many countries struggled to control the coronavirus health crisis.
“The better-than-expected data indicates that growth has moved into expansionary territory, although some sectors are still recovering,” said Wing Zhaopen, economist at ANZ Shanghai.
“The end of policies will exert counter-cyclical pressures on growth in 2021”, he added.
TURN
After a historic 6.8% contraction in the first quarter of 2020, when a hotbed of coronavirus contaminations in the city of Wuhan in the center of the country turned into a pandemic, the Chinese economy gradually recovered. by strict sanitary measures and stimulus measures deployed by Pkin.
The second-largest economy in the world was driven by the unexpected strength of exports, while consumption – a key engine of growth – fell short of expectations amid fears of a new wave of contamination.
Official data released last week showed stronger than expected export growth in December, as demand for medical equipment and other Chinese products was fueled by disruptions in other countries due to the coronavirus.
But, symbol of the impact of the health crisis, the annual growth of Chinese GDP in 2020 is the weakest for more than four decades.
The brighter economy highlighted by recent statistics has reduced the need for a prolonged easing of monetary policy this year. The central bank has scaled down some support measures, Reuters sources said, but key policymakers in Beijing have assured that there will not be a sharp turn.
On a quarterly basis, Chinese GDP grew by 2.6% over the October-December period, according to SNB data, while the consensus stood at + 3.2% after growth of 3.0% at final reading on the period July-September.
ANNE RADIEUSE IN SIGHT
Other statistics released on Monday show that retail sales fell 3.9% last year, illustrating the weakness of consumption and marking the first contraction since 1968.
Retail sales growth in December was below consensus, declining 4.6% from + 5.0 in November, as sales of cosmetics and automobiles in particular slowed.
However, the vast manufacturing sector continued its strong momentum, with industrial production increasing last month by + 7.3% year-on-year, beating the consensus and reaching its highest level since March 2019.
Ning Jizhe, director of the National Bureau of Statistics, told a press briefing that many favorable conditions should allow China to continue its economic recovery in 2021.
Analysts expect the Chinese economy to grow 8.4% this year before seeing its growth slow to 5.5% in 2022. The strong growth expected this year, which would be a peak in ten years, would however put correlated with the low level of growth in 2020.
Some analysts also warn that the recent rebound in the daily number of coronavirus infections in China could have an impact on activity and consumption, as the Lunar New Year holidays approach – a period in which hundreds of millions of people traditionally take the opportunity to travel. (French version Jean Terzian)
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