GDP passes 100 trillion yuan mark
China’s ‘better-than-expected results’ point to high-quality growth momentum in 2021
China’s stronger-than-expected economic rebound and continuous structural improvements last year have signaled that the country’s pursuit of high-quality growth is set to gain more momentum in 2021, officials and experts said.
The world’s second-largest economy grew 2.3 percent in 2020, and it should be the only major economy to have achieved annual growth, the National Bureau of Statistics said on Jan 18.
The country’s annual GDP came in at 101.6 trillion yuan ($15.7 trillion) last year, surpassing 100 trillion yuan for the first time and indicating that its overall national strength has reached a new level, the bureau said.
“Main targets and tasks for economic and social development have been accomplished with better-thanexpected results,” said Ning Jizhe, head of the NBS.
Economic growth normalized to pre-COVID-19 levels in the fourth quarter last year and hit 6.5 percent year-on-year, up from 4.9 percent in the third quarter, Ning said, adding that the achievements were hardearned amid the pandemic and global economic recession.
Multiple factors will help sustain steady economic recovery into 2021, he said, pointing to the country’s vast domestic market as having provided a strong buffer against external uncertainties while accelerating digitalization spurs high-quality development.
The government will further step up efforts to narrow income gaps and boost new consumption growth points while expanding investment to address weak links in the economy, Ning said.
Domestic consumption continued to gather speed as the country’s steady recovery from the novel coronavirus epidemic lent further support to economic growth.
Consumer spending accounted for 54.3 percent of the country’s GDP in 2020, 11.2 percentage points higher than the gross capital formation, or the outlays on additions to fixed assets, plus the net change in inventories, Ning told a news conference in Beijing.
Ning said consumption in 2020 was the highest in recent years, compared with the average 53.4 percent consumption rate seen between 2011 and 2019. “Consumption is playing an increasingly important role in spurring economic growth quarter by quarter. With the effective control and prevention of the epidemic, the (pent-up) consumer demand will gradually strengthen.”
According to the NBS, retail sales of consumer goods fell 3.9 percent on a yearly basis in 2020, but consumption upgrades spurred sales in the fourth quarter. Total retail sales expanded by 4.6 percent in the fourth quarter, 3.7 percentage points faster than that in the third quarter.
Retail sales of communication appliances, cosmetics and gold, silver and jewelry by enterprises above a designated size rose by 26 percent, 21.2 percent and 17.3 percent, respectively, during the fourth quarter, much higher than the levels seen in the preceding three months.
According to Ning, China has the right conditions to maintain steady economic recovery in 2021. “There is still plenty of room for improvement. Though the final consumption contributed to about 60 percent of the GDP growth from 2013 to 2019, it is still lower than the 70 percent to 80 percent levels seen in developed economies. More efforts are needed to boost the purchasing power of consumers… and the overall economic environment.”
Experts said they expect reviving consumption to replace investment and exports to become the main driver of economic growth in 2021, underpinning strong annual growth forecasts between 7 percent and 9 percent.
A low comparison base in 2020, ramped-up investment in manufacturing sectors and new types of infrastructure, as well as exports buoyed by the global economic recovery, will also help sustain China’s economic rebound, they said.
The country’s consumer market has gradually recovered from the effects of COVID-19, with the growth in retail sales accelerating in the fourth quarter from the third-quarter pace of 0.9 percent, even as local COVID-19 cases constrained consumption in December, according to the NBS.
Recovering income and stabilizing employment have boosted experts’ confidence in the anticipated recovery in consumption. The surveyed urban jobless rate nationwide was 5.2 percent in December and 5.6 percent on average for the whole year, within the government’s annual control target of 6 percent, the NBS said.
Per capita disposable income grew 2.1 percent in real terms to 32,189 yuan in 2020, with income growth for rural residents coming in at 3.8 percent and outpacing their urban counterparts, the bureau said.
“The narrowing income gap between urban and rural residents, in tandem with the quicker sales of goods related to consumption upgrades in the fourth quarter, signaled that consumption upgrading will percolate to lower-tier cities and rural areas, creating new growth points of consumption,” said Cheng Shi, chief economist at ICBC International.
Accelerating digitalization should be another of 2020’s key structural improvements that will help bolster high-quality development this year, experts said, with the use of 5G, intelligent technologies and the internet of things to further inject economic momentum.
The value-added output of hightech manufacturing sectors rose 7.1 percent last year, outpacing the 2.8 percent growth of the whole industrial sector, according to the NBS. Investment in high-tech industries grew 10.6 percent in 2020, versus 2.9 percent for total fixed-asset investment.
As the economy embarks on the 14th Five-Year Plan (2021-25), investment in innovation and new types of infrastructure will be stepped up this year, experts said.
Iris Pang, chief China economist at Dutch bank ING, said she expects active fiscal stimulus in 2021 to support technology research and development, companies in difficulties, and the development of green energy, while monetary policy is expected to remain as is, given an upbeat growth picture.
China’s GDP is expected to grow by 12 percent year-on-year in the first quarter of 2021 and 7 percent for the whole year, Pang said.
Despite promising growth prospects, officials and experts highlighted the need to be wary of mounting uncertainties, especially the pandemic situation and geopolitical tensions.
Wang Chikun, an independent economist, expects consumption to see double-digit growth this year. “Local governments will gradually roll out policies to boost consumer spending. With the government’s effective measures to prevent and control the epidemic and unleash the consumption potential, domestic consumption will see strong growth this year,” Wang said.
According to a report by the Center for Forecasting Science of the Chinese Academy of Sciences, China’s GDP growth rate is expected to rise by 8.5 percent on a yearly basis in 2021, while consumption growth rate will be around 10.7 percent to 11.7 percent.
Wu Chaoming, chief economist at Chasing Securities, expects the government to make a big push to expand effective demand this year, such as bolstering domestic consumption, improving the income distribution structure, increasing people’s incomes and expanding effective investment.
“More efforts will also be made to narrow income gaps and fully unleash the consumption potential of lowincome people and expand middleincome groups,” Wu said.
Luo Zhiheng, deputy director and chief macroeconomic analyst at the research institute of Yuekai Securities, expects the expanding domestic demand to sustain and develop the new dual-circulation development model in the country.
Under the new development pattern, greater efforts should be made to adjust the national income distribution structure, optimize the fiscal expenditure structure, deepen household registration system reforms, improve the supply structure, and relax market access in fields like tourism, culture, healthcare, elderly care, education and training and housekeeping services, Luo said.
“Consumption is playing an increasingly important role in spurring economic growth quarter by quarter. With the effective control and prevention of the epidemic, consumer demand will gradually strengthen.”
NING JIZHE
Head, National Bureau of Statistics