Volunteers wearing personal protective equipment (PPE) organize food deliveries on November 26, 2021 in a residential area of Shanghai under restrictions to stop the spread of Covid-19.
Yin Liqin | China Information Service | Getty Images
BEIJING — China’s economy grew 8.1% in 2021 and industrial production rose steadily through the end of the year and offset a drop in retail sales, according to official data from the National Bureau of Statistics. from China released on Monday.
Fourth-quarter GDP rose 4% from a year ago, according to China’s National Bureau of Statistics. That’s faster than the 3.6% increase predicted by a Reuters poll. For the full year, Chinese economists were expecting average growth of 8.4% in 2021, according to financial data provider Wind Information.
Industrial production rose 4.3% in December from a year ago, the bureau said, also beating Reuters’ 3.6% growth forecast.
However, retail sales beat expectations and rose 1.7% in December from a year ago. Analysts polled by Reuters had predicted a 3.7% rise.
“We should be aware that the external environment is more complicated and uncertain, and the domestic economy is under the triple pressure of shrinking demand, supply shock and weakening expectations,” he said. the office said in a statement.
Capital investment for 2021 increased 4.9%, beating expectations of 4.8% growth.
The urban unemployment rate in December was the year’s average of 5.1%. The unemployment rate for 16 to 24 year olds remained much higher at 14.3%.
China’s Zero Covid Policy
China’s zero Covid policy aimed at controlling the pandemic has led to new travel restrictions within the country – including the lockdown of the city of Xi’an in central China in late December.
In January, other cities were also closed in whole or in part, to control pockets of outbreaks linked to the highly transmissible variant of omicron. Analysts have begun to question whether the benefits of China’s zero Covid strategy outweigh the costs, given how contagious and potentially less lethal the omicron variant is.
Goldman Sachs cut its forecast for China’s GDP growth in 2020 based on expectations that the zero-Covid policy will lead to increased restrictions on business activity. However, analysts said the biggest impact would be on consumer spending.
Retail sales fell in 2020 even as China’s overall economy grew amid the pandemic. Consumer spending has remained sluggish since, in part because travel restrictions have dampened tourism.
Earnings of company employees generally increased between 2020 and 2021, especially in labor-intensive industries like restaurants and manufacturing, said Christine Peng, head of consumer sector for Greater China. at UBS, during a media call last week.
But she noted that growing uncertainty has led consumers to delay purchases of discretionary goods, such as new air conditioners. Peng said consumers are also thinking longer term, and within households, female consumers are more willing to buy insurance or other financial management products.
China’s gross domestic product grew 2.2% in 2020 from a year earlier. That’s according to the latest figures from the National Bureau of Statistics, which released an annual data revision in December that cut GDP growth in 2020 by 0.1 percentage points.
Compared to the initial release earlier in 2021, the real estate, transportation, and accommodation and food industries saw the largest downward revision. Rental, leasing and business services saw the largest increase, followed by manufacturing.
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