China GDP grows 2.3% in 2020 after Q4 surge

China’s economy grew by 2.3% in 2020 in a sharp rebound from the coronavirus pandemic which tore through the country in the early part of the year, according to official figures released on Monday.

The annual growth rate was the lowest since the Chinese economy shrank by 1.6% at the end of the Cultural Revolution in 1976, but was in stark contrast to the performance of other major economies, all of which have reported contractions as they struggle to battle the crisis.

Growth accelerated in the final quarter, with the economy expanding 6.5% year on year ahead of analysts’ forecasts of 6.2%, the National Bureau of Statistics (NBS) said.

It was also a marked change from the first quarter of 2020, when the economy shrank by 6.8%, in the first quarterly contraction since records began.

NBS chief Ning Jizhe said that “the main targets of economic and social development [in 2020] have been completed better than expected”.

“China is expected to become the only one major economy in the world to achieve positive economic growth throughout the year,” said Ning, adding that quarterly GDP growth “have returned to the normal level”.

CMC Markets analyst Michael Hewson said that while the headline GDP number looked impressive, “it is still clear from consumer spending numbers that the Chinese consumer is still exhibiting some level of caution with retail sales growth still below the levels last seen at the end of 2019, when spending was trending at levels close to 8%”.

“This morning’s December numbers showed that retail sales rose for the fourth month in succession, rising 4.6%, a slight decline from November’s 5% rise, and below expectations,” he said. Year on year retail sales declined 3.9%.

“The slowdown in retail spending is a little worrying which suggests that, for all of this trend of economic improvement, there is some worry given reports of isolated coronavirus outbreaks within China, which are prompting localised lockdowns on a rolling scale.”