China's gross domestic product grew 2.3% year over year in 2020, according to the National Bureau of Statistics Monday. This is the slowest growth since 1976 and compared with a 6% year-over-year gain in 2019.
"China is likely to be the only major economy to avoid a contraction as many nations struggled to curb the COVID-19 shocks," the bureau said.
In the fourth quarter the economy grew 6.5% year over year - the most in two years and beating a market consensus of 6.1%. "The recovery from the pandemic gained momentum" in the quarter, the bureau said.
"The higher-than-expected gross domestic product number indicates that growth has stepped into the expansionary zone, although some sectors remain in recovery," ANZ economist Xing Zhaopeng said from Shanghai.
"Policy exiting will pose countercyclical pressures on 2021 growth."
Analysts expect economic growth to rebound to 8.4% in 2021 before slowing to 5.5% in 2022.
"We think this strength will persist during the first half of this year, before giving way to a weaker second half," Capital Economics' senior china economist Julian Evans-Pritchard said Monday.
"The gross domestic product figures often need to be taken with a grain of salt. But our in-house measure, the China activity proxy, also points to a marked pickup in growth last quarter despite showing a deeper downturn earlier in the year. Our initial estimate, based on full data for October and November and partial data for December, is that the economy grew 7.4% year over year in the fourth quarter - up from 4.9% in the third quarter.
The breakdown of the gross domestic product data shows a further pickup in industry and construction last quarter, from 6.0% year over year to 6.8%. But the biggest tail wind was the improvement in service sector growth, from 4.3% on year to 6.7%.
"The big picture is still that activity remains strong, which is helping to support the labor market. After dropping back in previous months, the surveyed unemployment rate held steady at 5.2% in December, the level at which it was at pre-virus," Evans-Pritchard said.
"We think the outlook remains bright in the near term. Despite the latest dip in retail sales, we see plenty of upside to consumption as households run down the excess savings they accumulated last year. Meanwhile, the tailwinds from last year's stimulus should keep industry and construction strong for a while longer," Evans-Pritchard said.
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 warned a recent rebound in COVID-19 cases in China could affect activity and consumption in the run-up to next month's long Lunar New Year holidays.
On a quarter-over-quarter basis gross domestic product advanced a seasonally adjusted 2.6% on quarter in the three months to December 2020 following an upwardly revised 3% rise in the previous quarter and less than market expectations of a 3.2% expansion. "This was the weakest quarterly growth since a contraction in the first quarter of 2020," the bureau said.
Meanwhile, in other data industrial production increased by 7.3% year over year in December 2020 - the most since June 2017 and beating market expectations for a 6.9% rise "as activity continued to recover from the COVID-19 shock."
On a sector basis production grew for mining at 4.9%, utilities 6.1% and manufacturing 7.7%. Production expanded for chemicals at 7.5%, communications 11.4% and 5.2% for textiles.
Retail trade rose by 4.6% year over year in December 2020 after a 5.0% gain in November and compared with market expectations for a 5.5% rise.
