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China’s economic growth increased by 8.1 percent in 2021: Report

China’s economic growth

China’s economic growth increased by 8.1 percent in 2021 according to data released by China’s National Bureau of Statistics (NBS). This is due to the rise in industrial production during the year-end. With this increase, the country also experienced a drop in retail sales in several sectors states the report. GDP for the fourth quarter rose four percent compared to the numbers in 2020. 

According to the NBS report, industrial production increased by 4.3 percent in December. Auto production showed growth since April of 3.4 percent compared to the previous year. Investments in Fixed assets grew 4.9 by percent and real estate investment rose by 4.4 percent. Investments in infrastructure rose by 0.4 percent while investment in manufacturing grew by 13.5 percent with special purpose machinery having the most rise, (24.3 percent year-on-year, according to data by Wind). 

Amidst the global pandemic nations tried to stay afloat by adopting various measures. Rich economies tried to stimulate their economy by issuing more currency.  U.S continued its policy of suppression of China in economy and trade which has hindered China’s development. China faced a lot of problems in recent times like the endemic, floods and price hike, still it saw good growth. China is experiencing steady growth as its total GDP has grown to 114 trillion yuan from 101 trillion yuan in recent times as per reports.  

During the last three months of 2021, the economy increased at a four percent annual pace which is less than the third quarter growth rate of 4.9 percent. High-tech manufacturing and equipment manufacturing sector went up by 18.2 percent and 12.9 percent, respectively. China’s total foreign trade in goods surpassed 6 trillion USD in 2021. 

China’s economic growth ranks among the major world economies. Germany’s economy grew by 2.7 percent in 2021. U.K, U.S and Japan clocked in a reduced growth than target of 6.9 percent, 5.6 percent and 2.7 percent, respectively.  

China’s economic growth increased by 2.2 percent in 2020 according to latest data by NBS.  Head of NBS, Ning Jizhe said in a press conference in 2021 that China’s economy has reached a valuation of 17.7 trillion USD earning it the second largest economy in the world with GDP above 12000 USD.

But according to data, the urban unemployment rate is increasing with it being 5.1 percent in December, and the unemployment rate for age bracket 16 to 24 being higher, at 14.3 percent.

“The better-than-expected GDP data doesn’t change the big picture: China’s economy is under multiple headwinds for now and a policy easing cycle is underway,” Larry Hu, chief economist at Macquarie, said in a note to CNBC.

Retail sales saw an overall increase of 12.5 percent in 2021 after a drop of 3.9 percent in 2020. In December 2021 retail sales experienced an 18.8 percent increase in sales of daily necessity goods with reduction in sales in industries such as automobile, home appliances and furniture saw a drop. 

Louis Kuijs, head of Asia economics at Oxford Economics to said Bloomberg “Consumption remains the weakest link in China’s growth story at the moment and that will by and large continue for much of this year.”

“We must be aware that the external environment is more complicated and uncertain, and the domestic economy is under the triple pressure of demand contraction, supply shock and weakening expectations,” NBS said in a statement.

Many cities were locked this month in China due to the rising omicron variant of the coronavirus and China’s strict stance on controlling the spread. Many analysts are questioning the benefits of this strategy as this affects the economy and the omicron variant is reported to have milder symptoms. 

“The pandemic could continue to be a drag on the revival of consumer spending – although the situation in China remains relatively under control … compared with other large economies,” Bruce Pang, head of macro and strategy research, China Renaissance, said in a statement published in Bloomberg. 

Recently, for the first time in nearly two years, China’s central bank cut its interest rate to help boost the economy that has stalled due to a succession of viral outbreaks. In a policy divergence with other major economies, the People’s Bank of China cut the rate at which it gives one-year loans to banks by 10 basis points, the first cut since April 2020. The rate cut is part of China’s efforts to stabilise growth in the economy in a critical year. Infrequent outbreaks of the more contagious omicron coronavirus, as well as ongoing property sales reductions, which reduce housing investment, are the most significant barriers to accomplishing that goal.

Related: World Bank expects the Indian economy to grow at 8.3%

Mayur is a trainee journalist with a passion for writing

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