World’s Second-Largest Economy Grew by 8.1% in 2021

The economy of China rose by 8.1% in 2021 as industrial production rose steadily through the end of the year and offset a drop in retail sales, according to the information released by the country’s National Bureau of Statistics. 

The gross domestic product (GDP) rose by 4% from a year ago, according to the statistics bureau. For the full year, economists expected an average of 8.4% growth in 2021. 

Industrial production grew by 4.3% in December from a year ago. Notably, auto production rose for the first time since April, up by 3.4% year-on-year in December. 

Fixed asset investment for 2021 rose by 4.9%, surpassing expectations for 4.8% growth. Besides, investment in real estate grew by 4.4%, while infrastructure rose by 0.4%.

In 2021, investment in manufacturing rose by 13.5% from a year ago, with that in special purpose machinery rising the most, up by 24.3% year-on-year. 

Nevertheless, retail sales missed expectations and grew by 1.7% in December from a year ago. 

China’s economy and the pandemic

As mentioned earlier, China has the second-largest economy in the world. Still, the country has to cope with various issues. 

In December, the urban unemployment rate matched the average for the year of 5.1%. However, the unemployment rate for those aged 16 and 24 remained far higher at 14.3%. 

China is not willing to abandon its zero-Covid policy. The country’s zero-Covid policy aimed at controlling the pandemic prompted renewed travel restrictions within China. This month, other cities were also locked down in full or partially to control pockets of outbreaks tied to the omicron variant. 

Analysts started to question whether the benefits of the country’s zero-Covid strategy outweigh the costs. Goldman Sachs reduced its forecast for China’s 2022 GDP growth based on expectations the zero-Covid policy will cause increased restrictions on business activity.

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