- China the only major economy to expand in 2020
- New ‘Dual Circulation’ policy and maturity of Belt & Road Initiative impacting on ‘new era’ supply chains
- Move to consumer economy good news for global traders
China’s economy grew faster than expected in the final quarter of 2020, indicating an underlying resilience in the wake of the COVID-19 pandemic and setting the scene for an encouraging start to 2021.
The figures were released by China’s National Bureau of Statistics, were slightly higher than those predicted and continued growth from the 4.9% performance in the third quarter. The Q4 figures mean that overall, in 2020, China’s GDP grew 2.3% over the course of the year. That has made China the only major global economy to avoid a contraction last year.
The Chinese economy was fueled by a resilient export sector, but domestic consumption – a key driver of growth – has remained sluggish. However, China’s new ‘Dual Circulation’ policy, introduced at the end of last year, is expected to encourage Chinese consumption and is a step towards moving the Chinese economy from an export manufacturing base to a consumer model.
“This shift in approach will take time to accomplish,” says Chris Devonshire-Ellis of Foreign Investment advisors Dezan Shira & Associates. “Bumps can be expected along the way and especially as the global economy emerges from COVID. However China has already been very active the past three months, with Foreign Minister Wang Yi visiting ASEAN and African nations to shore up the regional markets and stabilize trade. In fact, we will start to see much more engagement by China in Africa and to some extent Russia over 2021 as global trade moves into a new supply chain era. The Belt and Road Initiative infrastructure build is coming to fruition and is changing where China and its consumers obtain their daily commodity needs. This is good news for global traders and export manufacturers.”
See also: A New China for 2021.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at email@example.com.
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