China today became the only major economy in the world to report that it grew in 2020, even as the global Covid pandemic that started in its Hunan province killed more than two million.
The country reported economic growth of 2.3% for the year after a rip-roaring final quarter which saw it going into 2021 stronger than before the coronavirus.
The country has rapidly bounced back from the pandemic it hastened by continuing international flights long after locking down domestic traffic in January.
Its rapid revival is being seen both as a testament to its draconian lockdown rules and its factories’ rapid skills in churning out PPE equipment for the world’s struggling hospitals and healthcare workers.
Industrial output was the mainstay of its recovery, boosting GDP througout the year. In December, China’s factories produced 7.1% more than a year ago.
They have received large amounts of state support during the pandemic.
The figures came just days after it reported its highest monthly trade surplus in history.
However, inside today’s numbers were some cause for concern in the powerhouse Asian economy.
Retail sales for the month of December “only” grew at 4.6%.
While that would be welcome in most Western economies, it was markedly slower than the 5% seen in November and way down on investors’ forecasts of 5.5%.
Economists at MUFG were concerned about the retail numbers showing Chinese consumers were still struggling from the pandemic.
“It was well below the consensus forecasts and for the year as a whole retail sales contracted by 3.9%.
“The pockets of weakness remain a concern and question the sustainability of the strong recovery going forward,” its economists warned.
Furthermore, analysts cited concerns over the impact of new Covid-related restrictions in China, where new outbreaks have been seen recently.
“Nevertheless,” MUFG said, “we continue to expect China’s economy to lead the global recovery in the year ahead.”