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Chinese economy rebounds with 8.1% growth forecast

China's economy rebounded in 2021 with its best growth in a decade. Source:: Reuters.

BEIJING: China’s economy rebounded in 2021 with its best growth in a decade, helped by robust exports but there are signs that momentum is slowing on weakening consumption and a property downturn.

Growth in the fourth quarter hit a one-and-a-half-year low, government data showed on Monday shortly after the central bank moved to prop up the economy with a cut to a key lending rate for the first time since early 2020.

The economy is struggling with a rapidly cooling property sector, as well as sporadic small-scale COVID-19 outbreaks that could deal a blow to its factories and supply chains. Several Chinese cities went on high alert ahead of the Lunar New Year holiday travel season as the Omicron variant reached more areas including the capital Beijing.

The economy grew 8.1% last year – its best expansion since 2011 – and faster than a forecast 8.0%. The pace was well above a government target of “above 6%” and 2020’s revised growth of 2.2%. The economy recorded its weakest growth in 44 years in 2020 but staged a faster recovery than other major economies.

Gross domestic product grew 4.0% in the final quarter, National Bureau of Statistics (NBS) data showed, faster than expected but still its weakest pace since the second quarter of 2020. Growth was 4.9% in the third quarter.

“At present, the downward pressure on China’s economy is still relatively big, and growth of residents’ employment and income is restricted,” Ning Jizhe, head of the NBS, told a news conference.

On a quarter-on-quarter basis, GDP rose 1.6% in October-December, compared with expectations for a 1.1% rise and a revised 0.7% gain in the previous quarter.

China’s economy got off to a strong start in 2021 but economists expect growth to slow in the coming months. The central bank unexpectedly cut the borrowing costs of its medium-term loans for the first time since April 2020, leading some analysts to expect more policy easing this year to guard against developers’ mounting risk of defaults.

Global share markets were choppy on Monday and benchmark Dalian and Singapore iron ore futures fell after signs of continuing economic weakness in top steel producer China. read more

In a video speech to a virtual World Economic Forum event on Monday, President Xi Jinping said the overall momentum of China’s economy was sound and that countries should strengthen policy coordination and prevent the world economy from dipping again.

Adding to another long-term concern for the economy, mainland China’s birth rate dropped to a record low of 7.52 per 1,000 people in 2021, NBS data also showed on Monday, extending a downward trend that led Beijing last year to begin allowing couples to have up to three children

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