China's economy grows by 8.1 per cent in 2021 amidst challenges posed by pandemic

The pace was well above the government target of "above 6 per cent", and put the two-year average growth at 5.1 per cent, the NBS data showed.

Published: 17th January 2022 06:35 PM  |   Last Updated: 17th January 2022 06:35 PM   |  A+A-

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China Flag (File Photo | AP)


BEIJING: China's economy grew by 8.1 per cent in 2021 to about USD 18 trillion, stated to be the best by the world's second largest economy in a decade, amidst challenges, including sporadic epidemic resurgences and a complicated external environment, the government said on Monday.

The country's GDP expanded 8.1 per cent year-on-year to 114.37 trillion yuan (about USD 18 trillion) last year, the National Bureau of Statistics (NBS) said on Monday.

The pace was well above the government target of "above 6 per cent", and put the two-year average growth at 5.1 per cent, the NBS data showed.

China's economy grew 8.1 per cent year-on-year in 2021, despite sporadic epidemic resurgences and a complicated external environment, the official Xinhua news agency reported.

However, the NBS also announced that China's population grew to 1.41 billion by the end of last year, increasing by less than half-a-million as the birth rate fell for the fifth consecutive year, stoking fears of a looming demographic crisis and a consequent economic slowdown in the world's most populous nation.

At the end of 2021, China's population on the mainland grew to 1.4126 billion from 1.4120 billion in 2020, the NBS said. China's population increased by 480,000 year-on-year, down from 12 million in 2020.

Experts have warned that a demographic turning point may be just around the corner in the world's most populous nation, and some say it threatens to erode the foundation of China's booming economic growth over the past 40 years, the Hong Kong-based South China Morning Post reported.

"The most shocking part of the data released today is that the natural growth of the population has dropped to 0.34 per thousand, the first time below 1.0 since data became available," Zhang Zhiwei, chief economist at Pinpoint Asset Management said.

"The demographic challenge is well known, but the speed of population ageing is clearly faster than expected. This suggests China's total population may have reached its peak in 2020. It also indicates China's potential growth is likely slowing faster than expected," he was quoted as saying by the Post.

China permitted all couples to have two children in 2016, scrapping the draconian decades-old one-child policy.

Last year, China passed a revised Population and Family Planning Law, allowing Chinese couples to have three children, in an apparent attempt to address the reluctance of couples to have more kids due to mounting costs.

As per the data from the 2020 census, the demographic crisis China faced was expected to deepen as the population above 60 years grew to 264 million, up by 18.7 per cent.

On the economic front, the official figures released by the NBS said China's economy grew by four per cent in the fourth quarter of last year, slowing from the 4.9 per cent growth in the third quarter, rounding off the full year's growth rate to 8.1 per cent in 2021.

The GDP increase is also above the six per cent target set by the government for the year. Before the 2021 economic figures were confirmed on Monday, the People's Bank of China also cut its two major policy rates by 10 basis points, further evidence of Beijing's intention to stabilise the growth in 2022.

The central bank sold 700 billion yuan (USD 110 billion) worth of one-year medium-term lending facility at 2.85 per cent on Monday, compared to the previous rate of 2.95 per cent, the Post report said.

The seven-day reverse repurchase rate, a major liquidity injection tool, was also lowered to 2.1 per cent from 2.2 per cent.

It was the first such policy rate cut since April 2020, when China looked to offset the initial impact of the coronavirus.

Final consumption contributed 65.4 per cent to the GDP expansion, while net exports contributed 20.9 per cent, NBS head Ning Jizhe said at a press conference.

"China's growth was among the fastest in major economies in the world last year," said Ning, adding that the country's GDP is estimated to account for more than 18 per cent of the global total and contribute to some 25 per cent of global GDP growth.

The per capita GDP of China reached around USD 12,500 in 2021, exceeding the global average, Ning said.

Gross Domestic Product (GDP) grew by four per cent for the last three months of 2021 from a year earlier, amid slowdown of the property market.

The Chinese economy struggled with a rapidly cooling property sector in several cities as well as sporadic COVID-19 outbreaks in different parts of the country, including the latest Omicron scare disrupting factory production and supply chains.

To shore up growth, China's central bank on Monday cut the interest rate of medium-term lending facility loans by 10 basis points to maintain reasonably ample liquidity, following a cut in the one-year loan prime rate and a reduction in banks' reserve requirement ratio in December, Xinhua news agency reported.

The country's job market showed signs of slowdown with the surveyed urban unemployment rate standing at 5.1 per cent amounting to 12.69 million jobs last year, which is below the government target of "around 5.5 per cent".

Yue Su, principal economist at The Economist Intelligence Unit, told the Post that “despite the fact that fourth quarter GDP is slightly above expectation, China has reached a point when the government needs to reconsider its 'dynamic zero Covid-19 policies'".

"This is because the stimulus policies that the government is adopting so far didn't show enough effectiveness mainly due to the weaknesses in the private sector," Yue said.

Martin Raiser, World Bank's country director for China, said the 8.

1 per cent growth was partly due to the statistical rebound after a GDP decline in the first half of 2020, normalisation of domestic economic activity as the epidemic remained mostly controlled and strong export performance.

Going into 2022, the macroeconomic environment would be less benign as the stimulus in the advanced economies is being withdrawn, while the developing countries still face substantial challenges related to the ongoing pandemic, which will result in weaker export demand, supply bottlenecks and cloudy global prospects, Raiser observed.

"From China's perspective, however, these risks look manageable. China has domestic policy space and could thus support growth if needed," he was quoted as saying by Xinhua.

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