2021.01.1804:53:00UTC+00China's GDP Growth Accelerates More Than Expected

China's economy gained further momentum towards the end of 2020 as the domestic activity continued to recover from the Covid-19 driven downturn.

Gross domestic product climbed 6.5 percent on year in the fourth quarter of 2020, the National Bureau of Statistics said on Monday. The rate exceeded the expected 6.1 percent and up from 4.9 percent growth posted in the third quarter.

On a seasonally adjusted basis, GDP expanded 2.6 percent but slower than the revised 3 percent rise in the preceding three months and the 3.2 percent increase economists had forecast.

In the whole year of 2020, GDP advanced 2.3 percent, making China the only major economy to avoid a contraction amid the Covid-19 pandemic. However, this was the weakest growth since 1970s.

It is too early to conclude that this is a full recovery, Iris Pang, an ING economist said. External demand has not yet fully recovered. This is a big hurdle for a full recovery of China's industrial production, especially for smaller manufacturers.

The bureau also said that industrial production jumped 7.3 percent on year in December, beating forecasts for 6.9 percent and up from 7.0 percent in November. In the whole year, output gained 2.8 percent. Meanwhile, annual growth in retail sales eased to 4.6 percent from 5 percent in November, and missed expectations for 5.5 percent rise.

Fixed asset investment climbed 2.9 percent year to date in December, missing expectations for 3.2 percent. The unemployment rate was 5.2 percent in December. The monthly data suggest that growth dropped back slightly heading into 2021 but it remains strong, Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said. This strength is likely to persist during the first half of this year, before giving way to a weaker second half.