China’s economy picks up speed

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    People wearing face masks shop at a market, following new cases of the coronavirus disease (COVID-19) in Beijing. (Reuters Photo)

    BEIJING- China’s economy picked up speed in the fourth quarter, with growth beating expectations as it ended a rough coronavirus-striken 2020 in remarkably good shape and remained poised to expand further this year even as the global pandemic raged unabated.

    The world’s second-largest economy has surprised many with the speed of its recovery from last year’s coronavirus jolt, especially as policymakers have also had to navigate tense US-China relations on trade and other fronts.

    Beijing’s strict virus curbs enabled it to largely contain the COVID-19 outbreak much quicker than most countries, while government-led policy stimulus and local manufacturers stepping up production to supply goods to many countries crippled by the pandemic have also helped fire up momentum.

    Gross domestic product (GDP) expanded 6.5 percent year-on-year in the fourth quarter, data from the National Bureau of Statistics showed on Monday, quicker than the 6.1 percent forecast by economists in a Reuters poll, and followed an upwardly revised 4.9 percent growth in the third quarter.

    GDP grew 2.3 percent in 2020, the data showed, making China the only major economy in the world to avoid a contraction last year as many nations struggled to contain the COVID-19 pandemic.

    “The higher-than-expected GDP number indicates that growth has stepped into the ex-pansionary zone, although some sectors remain in recovery,” Xing Zhaopeng, economist at ANZ in Shanghai.

    “Policy exiting will pose countercyclical pressures on 2021 growth.”

    Backed by strict virus containment measures and policy stimulus, the economy has recovered steadily from a steep 6.8 percent slump in the first three months of 2020, when an outbreak of COVID-19 in the central city of Wuhan turned into a full-blown epidemic.

    Asia’s economic powerhouse has been fuelled by a surprisingly resilient export sector, but China’s consumption – a key driver of growth – has lagged expectations amid fears of a resurgence of COVID-19 cases.

    Data last week showed Chinese exports grew by more than expected in December, as coronavirus disruptions around the world fuelled demand for Chinese goods even as a stronger yuan made exports more expensive for overseas buyers.

    Yet, underscoring the massive COVID-19 impact worldwide, China’s 2020 GDP growth was the weakest pace since 1976, the final year of the decade-long Cultural Revolution that had wrecked the economy.

    Overall, the slew of brightening economic data has reduced the need for more monetary easing this year, leading the central bank to scale back some policy support, sources told Reuters, but there would be no abrupt shift in policy direction, according to top policymakers.