BEIJING, Jan 17 — China’s economic growth was faster than expected in the final quarter of 2021 but still its weakest pace in one-and-half years, with the central bank cutting loan rates to cushion slowing momentum in the world’s second-largest economy.
The country faces headwinds from regulatory curbs, property sector woes and sporadic Covid-19 outbreaks.
Gross domestic product (GDP) expanded 4.0 per cent in the October-December period from a year earlier, against 4.9 per cent growth in the third quarter, National Bureau of Statistics data showed on Monday. Analysts had forecast a rise of 3.6 per cent in a Reuters poll.
The economy grew 8.1 per cent in 2021, faster than a forecast 8.0 per cent and well above a government target of “above 6 per cent” and 2020’s revised growth of 2.2 per cent.
On a quarter-on-quarter basis, GDP rose 1.6 per cent in October-December, compared with expectations for a 1.1 per cent rise and a revised 0.7 per cent gain in the previous quarter.
China’s economy got off to a strong start in 2021 as activity rebounded from a pandemic-induced slump the previous year, but it has lost steam due to a property downturn, debt curbs and strict Covid-19 curbs which have hit consumption.
Chinese leaders have pledged more support for the economy, which is facing multiple headwinds into 2022.
China’s central bank on Monday unexpectedly cut the borrowing costs of its medium-term loans for the first time since April 2020, leading some analysts to expect more policy easing this year to cushion an economic slowdown.
The People’s Bank of China (PBOC) said it was lowering the interest rate on 700 billion yuan (US$110.2 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85 per cent from 2.95 per cent in previous operations.
“Economic momentum remains weak amid repeated virus outbreaks and a struggling property sector. As such, we anticipate another 20 bps of cuts to PBOC policy rates during the first half of this year,” said analysts at Capital Economics, in a note.
Weak consumption data also clouded the outlook, with retail sales in December missing expectations with only a 1.7 per cent increase from a year earlier, the slowest pace since August 2020. Analysts in the poll had expected them to grow 3.7 per cent after rising 3.9 per cent in November.
Several Chinese cities went on high Covid-19 alert ahead of the Lunar New Year holiday travel season, as the Omicron variant reached more areas including Beijing.
A bright spot was industrial output, up an annual 4.3 per cent in December, picking up from a 3.8 per cent increase in November, and better than a 3.6 per cent increase in a Reuters poll.
Fixed asset investment rose 4.9 per cent in 2021, compared with the 4.8 per cent increase tipped by analysts and 5.2 per cent in the first 11 months of the year. — Reuters