BEIJING –China’s economic system rebounded in 2021 from its pandemic-induced droop helped by sturdy exports however the tempo slowed additional within the fourth quarter off the again of weak consumption and a property downturn, pointing to the necessity for extra coverage help.

Progress within the October-December quarter hit a one-and-a-half-year low, authorities information confirmed shortly after the central financial institution moved to prop up the economic system with a reduce to a key lending price for the primary time since early 2020.

The world’s second-largest economic system is fighting a quickly cooling property sector, in addition to sporadic small-scale COVID-19 outbreaks that might deal a blow to its factories and provide chains.


A number of Chinese language cities went on excessive alert forward of the Lunar New Yr vacation journey season, because the Omicron variant reached extra areas together with the capital Beijing.

The economic system grew 8.1% in 2021, sooner than a forecast 8.0% and properly above a authorities goal of “above 6%” and 2020’s revised progress of two.2%.

A truck strikes containers on the Yangshan Deep Water Port in Shanghai, China January 13, 2022. Image taken January 13, 2022. REUTERS/Aly Track (REUTERS/Aly Track)

Gross home product grew 4.0% within the ultimate quarter, Nationwide Bureau of Statistics (NBS) information confirmed, sooner than anticipated however nonetheless its weakest tempo because the second quarter of 2020. Progress was 4.9% within the third quarter.

“At current, the downward stress on China’s economic system continues to be comparatively massive, and progress of residents’ employment and earnings is restricted,” Ning Jizhe, head of the NBS, instructed a information convention.

On a quarter-on-quarter foundation, GDP rose 1.6% in October-December, in contrast with expectations for a 1.1% rise and a revised 0.7% acquire within the earlier quarter.

China’s economic system bought off to a robust begin in 2021 however economists anticipate progress to gradual within the coming months.

China’s central financial institution unexpectedly reduce the borrowing prices of its medium-term loans for the primary time since April 2020, main some analysts to anticipate extra coverage easing this yr to protect in opposition to builders’ mounting threat of default.

The Individuals’s Financial institution of China mentioned it was reducing the rate of interest on 700 billion yuan ($110.2 billion) price of one-year medium-term lending facility (MLF) loans to some monetary establishments by 10 foundation factors to 2.85%. It additionally reduce the 7-day reverse repo price.


“Financial momentum stays weak amid repeated virus outbreaks and a struggling property sector. As such, we anticipate one other 20 bps of cuts to PBOC coverage charges through the first half of this yr,” mentioned analysts at Capital Economics, in a notice.

However Nomura mentioned in a notice the house left for future price cuts this yr was small. “We anticipate one other 10 bp price reduce earlier than mid-2022.”

Including to a different long-term concern for the economic system, mainland China’s start price dropped to a file low of seven.52 per 1,000 individuals in 2021, NBS information additionally confirmed on Monday, extending a downward pattern that led Beijing final yr to start permitting {couples} to have as much as three kids.


China’s property market has slowed in latest months as regulators stepped up a marketing campaign to chop excessive charges of borrowing, triggering defaults at some closely indebted firms.

Property funding dropped 13.9% in December from a yr earlier, falling on the quickest tempo since early 2020, in accordance with Reuters calculations primarily based on official information. Funding grew 4.4% in 2021, the slowest since 2016.

A buyer seems to be at decorations for Chinese language Lunar New Yr displayed at a stall inside a morning market in Beijing, China January 14, 2022. REUTERS/Tingshu Wang (REUTERS/Tingshu Wang)

Weak consumption information additionally clouded the outlook, with retail gross sales in December lacking expectations with solely a 1.7% enhance from a yr earlier, the slowest tempo since August 2020.

“The most important problem this yr for policymakers is how you can stabilise the economic system at a 5-5.5% vary in opposition to the backdrop of dynamic zero-COVID coverage,” mentioned Nie Wen, chief economist at Hwabao Belief in Shanghai.

A vibrant spot was industrial output, up an annual 4.3% in December, choosing up from a 3.8% enhance in November, and higher than a 3.6% enhance in a Reuters ballot.

China’s refinery output hit a brand new file in 2021, as did aluminium and coal manufacturing.

Mounted asset funding rose 4.9% in 2021, in contrast with the 4.8% enhance tipped by analysts and 5.2% within the first 11 months of the yr.

Booming shipments to coronavirus-hit economies abroad have been a key enhance to China’s progress final yr, with web exports accounting for greater than 1 / 4 of GDP progress in This fall and the nation logging its largest commerce surplus in 2021 since information began in 1950.


The outsized position that web exports performed in final yr’s GDP progress additionally underscored the relative weak point in different drivers. In contrast, web exports have been a drag on total progress in 2018, when the economic system relied extra on consumption and funding.

Nevertheless, the help from export progress might not final. It has been slowing as an abroad surge in demand for items eases and excessive prices stress exporters.