China GDP Grew 8.1% in 2021 to beat expectations
China’s economy expanded 8.1 per cent in 2021 as a pandemic-plagued world snapped up its goods, though slowing growth in the final months of the year points to challenges ahead for its economy.
The annual gross domestic product figure easily beat Beijing’s official growth forecast of 6 per cent, as exports surged to a record high.
The 8.1 per cent growth figure for 2021, which however matched some economists’ forecasts, adds to the country’s post-pandemic recovery, after China eked out a 2.2 per cent expansion in coronavirus-ravaged 2020.
The challenge for the world’s second-largest economy this year is to keep the post-pandemic recovery rolling for a third year, even as momentum slows and Beijing continues to push longer-term reforms in the economy to boost its birthrate, reduce inequality, lower debt and make the country less dependent on the world.
China’s leader, Xi Jinping, is widely expected to break with recent precedent and seek a third term in power—a political goal that demands a measure of economic stability and continued growth.
Underscoring concerns about growth momentum this year, China’s central bank on Monday slashed two sets of interest rates, which will fuel expectations for an additional cut to China’s benchmark lending rates.
The People’s Bank of China lowered its benchmark loan prime rate last month after leaders pledged to give priority to growth stability in 2022.
How China’s economy fares this year will also have ramifications for the rest of the world, which sells the country many of the natural resources it needs and, in turn, relies on its manufacturing might and central place in global supply chains.
After outperforming most other major economies in 2020, China was a relative laggard in 2021, registering below-potential growth for much of the year, said Tingting Ge, a greater China economist at JPMorgan Chase in Hong Kong.
“While the U.S. and some other economies were moving to gradually close the gap from the pre-pandemic path, China has fallen below [the] pre-pandemic potential path recently after a temporary above-trend growth,” Ms. Ge said.
The story of the Chinese economy last year had two distinct chapters: In the first half, GDP soared 12.7% from a year earlier, as the export-led recovery hit its stride and favorable comparisons to the darkest days of the initial Covid-19 outbreak flattered figures.
By contrast, in the second half of 2021, the economy began to feel the impact of measures imposed by regulators in Beijing to rein in some of the country’s most important engines of growth, chief among them the real estate and technology sectors.
The impact of those moves coincided with soaring commodity prices, power outages, snarled global supply chains, shortages of semiconductors and global rises in Covid-19 infections, including the Delta and Omicron variants.
“China’s economy is facing threefold pressure of demand contraction, supply shocks and expected growth weakening,” Ning Jizhe, China’s statistics chief, said Monday.
