China’s economy grew at a faster-than-expected pace in the fourth quarter of last year, ending a rough coronavirus-striken 2020 in remarkably good shape and remained solidly poised to expand further this year.

The gross domestic product (GDP) expanded 6.5%, data from the National Bureau of Statistics showed on Monday, faster than the 6.1% forecast by economists in a Reuters poll, and followed 4.9% growth in the third quarter.

GDP grew 2.3% in 2020, the data showed, making China the only major economy in the world to avoid a contraction last year as many nations struggled to contain the COVID-19 pandemic.

Aided by strict virus containment measures and policy stimulus, the economy has recovered steadily from a steep 6.8% slump in the first three months of 2020, when an outbreak of COVID-19 in the central city of Wuhan turned into a full-blown epidemic.

The world’s second-largest economy has been fuelled by a surprisingly resilient export sector, but consumption – a key driver of growth – has lagged expectations amid fears of a resurgence of COVID-19 cases.

Data on Thursday showed Chinese exports grew by more than expected in December, as coronavirus disruptions around the world fuelled demand for Chinese goods even as a stronger yuan made exports more expensive for overseas buyers.

Despite the steady recovery in quarterly growth, 2020 GDP growth was the weakest pace in more than four decades.

The slew of bright economic data has reduced the need for more monetary easing this year, leading the central bank to scale back some policy support, sources told Reuters, but there would be no abrupt shift in policy direction, according to top policymakers.

On a quarter-on-quarter basis, GDP rose 2.6% in October-December, the bureau said, compared with expectations for a 3.2% rise and a revised 3.0 gain in the previous quarter.

Analysts expect economic growth to rebound to 8.4% in 2021, before slowing to 5.5% in 2022.

While this year’s predicted growth rate would be the strongest in a decade, led by a big jump in the first quarter, it is rendered less impressive coming off the low base set in pandemic-stricken 2020.

Some analysts also cautioned that a recent rebound in COVID-19 cases in China could impact activity and consumption in the run-up to next month’s long Lunar New Year holidays.

China reported more than 100 new COVID-19 cases for the sixth consecutive day, with rising infections in the northeast fuelling concerns of another national wave ahead of a major holiday season.

Reuters

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