China’s economy grows 2.3%, slowest pace in 44 years

Stimulus created 11.86 mn urban jobs.

China said on Monday its economy expanded in 2020 by 2.3% , the slowest pace of growth since the end of Mao Zedong’s Cultural Revolution in 1976.

China will, however, likely be the only major economy to have avoided a contraction in a pandemic-hit year, underlining its strong recovery after weeks of lockdown at the start of the year brought economic activity in the Asian giant to a near-standstill.

China’s economy contracted 6.8% in the first quarter. The stringent lockdown did, however, allow the country to broadly curb the spread of COVID-19 at home by the summer. The economy recovered to grow 3.2% in the second quarter, 4.9% in the third and 6.5% in the last quarter of the year.

While China is currently dealing with the return of clusters of local outbreaks, the fact that the spread was limited and controlled meant the impact on the economy would be “controllable”, the head of China’s National Bureau of Statistics (NBS) in Beijing, Ning Jizhe, told reporters.

The NBS noted that the economy had also crossed the landmark of 100 trillion yuan ($15.4 trillion) for the first time in 2020.

If the last quarter’s strong growth brought some cheer to China, Monday’s data showed that it had come at a cost. The government’s long-term plan to rebalance growth and rely more on domestic consumption rather than state-led investment, ended up taking a step backward, as did its efforts to trim the ballooning national debt.

A range of stimulus measures, largely led by spending on infrastructure projects, was the main driver of growth in 2020 along with a rebound in exports, which grew 10.9% in December and 4% last year.

Value-added industrial output was up 2.8%, as the last quarter saw growth of 7.1%. Fixed asset investment grew 2.9%. Retail sales, however, contracted by 3.9% last year, after expanding 8% in 2019.

The other bright spot for the economy was on the jobs front.

The post-pandemic government support measures helped create 11.86 million new urban jobs, beating the 9 million target and marking a turnaround after the first quarter’s massive job losses. One report had estimated that as many as 80 million people had lost work as of March in the wake of the lockdown measures.

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