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China’s economy has picked up speed, as the world’s second-largest economy continues to outpace international rivals – led by strong factory growth.
Chinese GDP grew by 6.5% per year in the last three months of 2020, new official figures show. That’s an acceleration on the previous quarter, when GDP rose by 4.9%, and better than economists expected.
Quarterly growth in October-December was clocked at 2.6%.
China’s factory base led the recovery. Industrial production rose by 7.3% in December compared with a year ago, as Chinese manufacturers were lifted by Beijing’s stimulus measures and a pick-up in global demand.
But… consumers were more cautious, with retail sales growing by 4.6% per year in December, down from 5%.
Overall, Chinese consumers remained reluctant to spend, as retail sales contracted 3.9% during 2020.
Today’s GDP report shows that China’s economy grew by 2.3% during 2020 as a whole, having contracted sharply early last year during the coronavirus outbreak in Wuhan.
That’s the weakest since 1976, the final year of the decade-long Cultural Revolution. But it’s still ahead of, for example, Germany which shrank 5% last year.
China’s National Bureau of Statistics said the country had faced a “grave and complex environment both at home and abroad”, but that Beijing had taken “solid steps” to stabilize employment, finance, foreign trade, foreign investment, domestic investment and market expectations.
The national economy recovered steadily, employment and living standards were ensured forcefully, and the main goals and tasks of economic and social development were accomplished better than expectation.
Jeffrey Halley, senior Asia Pacific market analyst at OANDA,
Industrial Production rose by an impressive 7.30% as the rest of the world’s insatiable demand for Made in China showed no signs of slowing down. By contrast, domestic data still showed the caution that has been prevalent throughout the year.
Retail Sales for December rose 4.60% versus 5.50% expected, a cause for joy in any other country but China. That likely reflects the Covid-19 restrictions in parts of the country and the freezing weather that has sent energy prices soaring.
Unemployment, though, held steady at 5.20%, and this metric will leave Chinese authorities still in their comfort zone.
More reaction to follow….
Despite this recovery, European stock markets are expected to open lower — while Wall Street is closed for Martin Luther King day.
11am BST: Germany’s Bundesbank’s monthly economic report