The Communist Party of China prepares to mark its 100th birthday this year with massive pomp and ceremony, and the cream on the cake is an economy forecast to grow at twice the rate of the rest of the world.
The Chinese economy grew by 2.3 per cent to 101.6 trillion yuan in 2020 – its lowest growth rate since 1978 – according to statistics released this week by the National Bureau of Statistics of China.
The superpower recorded a historic slump in the first quarter of 2020, first to be hit as Covid-19 began to disrupt the global economy, and GDP declined by 6.8 per cent year on year.
To put this in context, it plunged further during in those three months than during the 2009 global financial crisis.
The Chinese economy returned to growth in the second quarter of 2020 when the year-on-year GDP went up by 3.2 percent.
With the help of the second quarter growth, China avoided experiencing two consecutive periods of negative growth – an indicator of entering a recession. China was the only major country recording positive growth in the second quarter of 2020.
Its economic growth continued in the third quarter of 2020 when it recorded year-on-year GDP growth of 4.9 percent.
Finally, the Chinese economy grew by 6.5 per cent in the fourth quarter of 2020, compared to a year ago. This is an impressive figure, higher than the pre-pandemic growth rates.
Three facets of China’s 2020 growth
China’s economic development experience since 1978 has been one of the great economic success stories of the 20th Century.
The country’s economic reforms, starting at the end of the 1970s, have driven a rapid transition of the economy from a central planning system toward a market-oriented system integrating with the world economy.
After recording more than 10 per cent growth rates in 1987 and 1988, China experienced growth slowdowns in 1989 and 1990, after the violent repression of the pro-democracy protests at Tiananmen Square in June 1989. That put a temporary end to the steady liberalisation of the Chinese economy.
The economy started to see high growth rates again in 1991, and the average annual growth rate between 1991 and 2019 was more than 9 per cent.
“China will continue to strive, march ahead with courage, and create brighter glory!”
– President Xi Jinping
The Chinese economy was already showing the signs of slowing down, even before the outbreak of the Covid-19 pandemic, recording a GDP growth of 6 per cent in 2019. In comparison with previous years’ growth rates, 6 per cent looks like a modest figure – but it prefaced a more significant drop in 2020.
Earlier in the year the World Bank forecast 1 percent growth for 2020; the International Monetary Fund forecast 1.9 percent. Even immediately before last week’s official National Bureau of Statistics of China announcement, the World Bank estimated it at 2 percent.
China’s 2.3 per cent growth comes as many other nations remain in the throes of the pandemic.
All major global players except China, will record negative annual growth in 2020, according to predictions by the IMF and the World Bank, the two pillars supporting the structure of the world’s economic and financial order.
This month’s World Bank Global Economic Prospects report estimates 2020 growth to be -3.6 percent for the United States, -7.4 percent for the Euro Area, and -5.3 percent for Japan.
Aspirations for 2021
China’s GDP topped 100 trillion yuan for the first time in 2020, and China is the first major economy worldwide to achieve positive growth.
In his New Year’s address, President Xi Jinping stated the importance of economic growth and highlighted the balance in the Chinese economy, supported by positive outcomes in the agricultural sector, continuous investment in infrastructure, and innovations in the high-technology sectors.
“China has seen a good harvest in grain production for 17 years in a row. China has seen breakthroughs in scientific explorations like the Tianwen-1 (Mars mission), Chang’e-5 (lunar probe), and Fendouzhe (deep-sea manned submersible). Construction of the Hainan Free Trade Port is proceeding with vigor.”
2021 is an important year for China, both historically and looking towards the future.
It marks the 100th birthday of the Communist Party of China and also marks the start of China’s 14th five-year plan, an economic road map covering 2021–25.
According to this month’s World Bank report, the 2021 growth forecast for China is at 7.9 per cent – doubled the global growth projection of 4 percent.
So can China go back to the years of double-digit economic records backed with high productivity growth? 2021 will provide some clues to answer such a question.
President Xi Jinping is optimistic, and he believes that the country “will continue to strive, march ahead with courage, and create brighter glory!”
