A Chinese flag flies near apartment buildings in Beijing.
Greg Baker | AFP | Getty Images
SINGAPORE – China’s new economic data over the next week will likely confirm the country as one of the few economies to grow in 2020 despite the challenges of the Covid pandemic, analysts said.
China will release official data on Monday that includes fourth quarter gross domestic product – tracked as an indicator of China’s economic health but has long been skeptical of the reports’ accuracy by outside experts.
China was the first country to report cases of the coronavirus in December 2019.
While there have been occasional outbreaks in some regions, the Chinese economy has largely rebounded since reporting A 6.8% year-over-year drop in the first quarter of 2020 as the country completed its Covid-19 containment.
Economists polled by Reuters expect China’s recovery to accelerate in the last few months of last year. They forecast an average increase in GDP of 6.1% year-on-year for the fourth quarter – an improvement on the growth of 4.9% in the previous quarter.
This is what some economists say about the Chinese economy.
Nomura – stronger exports
Forecast: GDP growth of 5.7% yoy in the fourth quarter and 2.1% yoy in 2020.
Stronger exports and a steady recovery in retail sales have helped China extend its growth rebound into the final three months of 2020, said Ting Lu, chief economist of China at Japanese bank Nomura.
“The resurgence of Covid-19 cases outside of China has further boosted China’s exports, particularly electronics for personal protective equipment (PPE) and homework (WFH). However, this may also slightly delay the full recovery of the domestic service sector,” he wrote in a Note.
“In contrast, mass vaccination could lead to the ultimate suppression of Covid-19 worldwide, which would be positive for the service sector but negative for China’s exports of PPE and WFH products.”
ING – potential “positive surprise”
Forecast: GDP growth of 5.5% year-on-year in the fourth quarter
Dutch bank ING said its forecast for the Chinese economy could be “subject to a positive surprise” – meaning the actual number may exceed expectations. This is because the export-induced recovery has gained further momentum.
ING found that Chinese exports “almost doubled” year over year from 8.9% in the third quarter to 17%.
“This should outweigh any possible slowdown in domestic demand due to the renewed virus threat,” the bank said in a note.
Barclays – catch up in services
Forecast: GDP growth of 6.5% year-on-year in the fourth quarter and 2.3% year-on-year in 2020.
Services and consumption – the main drag on the Chinese economy – picked up pace in the fourth quarter of last year, said Jian Chang, chief economist of China at British bank Barclays.
This will contribute to the “sustained strength of exports and investment” that fueled China’s “strong economic recovery” in the second and third quarters of last year, she said in a note.
Natixis – better prospects for 2021
Forecast: GDP growth of 6.3% yoy in the fourth quarter and 2.3% yoy in 2020.
Various indicators have pointed to China’s success in containing the economic damage caused by the pandemic, French investment bank Natixis said.
“With China likely to weather the freezing winter with continued testing of Covid-19, its economy will inevitably improve and current momentum will extend to a more solid economic recovery in 2021,” the bank said.
However, China’s economic performance is also affected by the external environment, “which depends not only on the global recovery from effective vaccines and their adoption, but also on the development of the precarious US-China relationship,” said Natixis.
– CNBC’s Evelyn Cheng contributed to this report.