China tops forecasts with 8.1% growth in 2021 but headwinds loom

China’s economy rebounded in 2021 with its best growth in a decade, helped by robust exports, but there are signs that momentum is slowing on weakening consumption and a property downturn.

Growth in the fourth quarter hit a one-and-a-half-year low, government data showed on Monday shortly after the central bank moved to prop up the economy with a cut to a key lending rate for the first time since early 2020.

The world’s second-largest economy is struggling with a rapidly cooling property sector, as well as sporadic small-scale Covid-19 outbreaks.

The economy grew 8.1 per cent last year – its best expansion since 2011 – and faster than a forecast 8.0 per cent. The pace was well above a government target of “above 6 per cent” and 2020’s revised growth of 2.2 per cent. The economy recorded its weakest growth in 44 years in 2020 but staged a faster recovery than other major economies.

Gross domestic product grew 4.0 per cent in the final quarter, National Bureau of Statistics data showed, faster than expected but its weakest pace since the second quarter of 2020. Growth was 4.9 per cent in the third quarter.  “The downward pressure on China’s economy is still relatively big, and growth of residents' employment and income is restricted,” Ning Jizhe, head of the NBS, said.