By Jonathan Cheng
BEIJING--China's economy expanded by 2.3% in 2020, roaring back
from a historic contraction in the early months of the year to
become the only major world economy to grow in what was a
pandemic-ravaged year.
China's ability to expand, even as the world struggled to
control a deadly virus that has killed more than two million
people, underscores the country's success in largely taming the
coronavirus within its borders and further cements its place as the
dominant economy in Asia.
China's growth makes it an outlier among large economies. The
World Bank expects the U.S. economy to contract by 3.6% this year
and the eurozone's to shrink by 7.4% in 2020, contributing to a
global economic pullback of 4.3%.
China's economy, the world's second largest, finished the year
on a high note. Gross domestic product rose 6.5% in the fourth
quarter from a year earlier, according to data released by the
National Bureau of Statistics on Monday, marking China's best
quarter of year-over-year growth in two years.
By comparison, China's GDP rose by 3.2% and 4.9% in the second
and third quarters of the year, respectively, after suffering a
historic 6.8% contraction in the first.
"In an extraordinary year, China's economy was able to record an
extraordinary achievement, handing over a result that satisfied the
Chinese people, attracted the attention of the world and which can
be written in the annals of history," Ning Jizhe, head of the
statistics bureau, said Monday. Mr. Ning said in 2020 the size of
China's economy surpassed 100 trillion yuan, or the equivalent of
$15.4 trillion, while GDP per capita topped $10,000 for the first
time.
The results also beat analysts' expectations. Economists polled
by The Wall Street Journal expected growth of 6% in the fourth
quarter and an expansion of 2.2% for the full year.
China's full-year growth rate of 2.3% marked the country's
weakest annual economic expansion since Mao Zedong's death in 1976.
Before 2020, the worst economic year of China's "reform and
opening" era that began in the late 1970s came in 1990, the year
after the Tiananmen Square crackdown, when the economy grew by
3.9%.
By logging 6.5% growth in the final quarter, China's economy has
reclaimed the growth trajectory that it had been on before the
coronavirus first began to spread across the city of Wuhan around a
year ago. In the last three months of 2019, the last full quarter
before the coronavirus began disrupting the global economy, China's
GDP rose 6% from a year earlier, contributing to a 6.1% expansion
for the full year.
This time last year, Chinese authorities in and around Wuhan
began reporting large numbers of people who were infected with what
was then a mysterious viral pneumonia. After Beijing took the
unprecedented step of locking down Wuhan on Jan. 23 last year,
economic activity across the country ground to a virtual halt for
much of the following months until the virus was largely stamped
out.
Unlike governments in Western countries like the U.S. that
focused their stimulus efforts on lowering borrowing rates and
handing out money to consumers, Beijing focused on restarting
factories while keeping interest rates relatively higher.
China's factories began to come back online in April, just as
much of the rest of the globe's manufacturing capacity was taken
out by the spreading pandemic. That allowed China to produce and
export mass quantities of medical equipment, like face masks, and
work-from-home equipment, such as laptops and computer
monitors.
Domestic consumption, however, continued to languish well into
the summer, as Chinese consumers were worried about a resurgence in
infections. Retail sales didn't return to their pre-coronavirus
levels until August and have remained relatively weak as a
contributor to the overall economy as outbreaks have continued to
pop up.
On Monday, China's statistics bureau said retail sales rose by
just 4.6% in December from a year earlier, lower than November's 5%
increase and a 5.5% expansion expected by economists. For the full
year, retail sales fell 3.9% in 2020 from a year earlier, compared
with 2019's 8% growth.
A current wave of new cases across northern China, centered in
Hebei province--which surrounds Beijing--is the worst in more than
half a year, with hundreds of local infection cases showing
symptoms in recent days. The outbreak threatens to derail consumer
spending during next month's long Lunar New Year holiday.
Even so, many forecasters expect China to grow by another 8% or
more in 2021 as other parts of the economy continue to make up for
the lost time last year. Data released Monday showed employment and
wages remain robust, which could help support consumption.
China's headline measure of joblessness, the official urban
surveyed unemployment rate, held steady at 5.2% in December, on par
with the pre-virus level a year earlier, according to the
statistics bureau.
Migrant workers' wages rose by 2.8% in the final three months of
2020, compared with a 2.1% increase in the previous quarter.
For now, the economic data released Monday reveals a Chinese
economy that continues to be driven primarily by industrial
production and investment rather than consumption.
Industrial output rose 7.3% in December from a year earlier,
accelerating from 7% growth in November and beating expectations
for a 6.8% increase among economists polled by The Wall Street
Journal. For the full year, industrial production increased 2.8%
from a year earlier in 2020, weaker than 2019's 5.7% increase.
Fixed-asset investment grew 2.9% in 2020 from a year earlier,
speeding up from a 2.6% year-over-year increase recorded for the
first 11 months of the year but slower than 2019's full-year growth
of 5.4%.
Any further recovery will likely have to take place without
additional aid from the government, said Xing Zhaopeng, a
Shanghai-based economist at ANZ.
With local governments in China still swimming in unspent
stimulus money left over from last year, which Mr. Xing estimates
to be about 2 trillion yuan, the equivalent of around $300 billion,
he argues Beijing will likely restrict the amount of debt local
governments can issue this year.
"Given the stronger-than-expected economic growth in the fourth
quarter, China's policy exit could come sooner than expected," Mr.
Xing said, pointing to recent remarks by officials indicating a
withdrawal of stimulus measures introduced last year.
Grace Zhu and Bingyan Wang contributed to this article.
Write to Jonathan Cheng at jonathan.cheng@wsj.com
(END) Dow Jones Newswires
January 18, 2021 00:03 ET (05:03 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.