The Chinese economy recovered in 2021 from the recession caused by the pandemic mainly due to strong exports, but the pace slowed further in the second quarter due to low consumption and the recession in the real estate market, indicating the need for greater policy support.
Growth in the October-December quarter was at a one-and-a-half-year low, government data showed, shortly after the central bank boosted the economy by lowering the key lending rate for the first time since early 2020.
The world’s second-largest economy is struggling with a sharp slowdown in the real estate sector, as well as sporadic surges in the number of cases that could hit supply chains and factories.
The economy grew by 8.1% in 2021, faster than the estimates for 8% and much higher than the government target of “over 6%” and higher than the revised growth of 2.2% for 2020.
GDP grew 4% in the last quarter, according to the statistical service, faster than expected but at the lowest rate since the second quarter of 2020.
In the third quarter, growth was 4.9%.
“At the moment, the downward pressure on the Chinese economy is still relatively high, and the growth of employment and income of the people is limited,” Ning Jizhe, head of the statistics service, told a news conference.
On a quarterly basis, GDP grew 1.6% in October-December, compared to expectations for a 1.1% rise and a revised 0.7% rise in the previous quarter.
The Chinese economy started the year dynamically but economists expect a slowdown in the coming months.
China’s central bank unexpectedly cut its borrowing costs on medium-term loans for the first time since April 2020, and led many analysts to expect more policy easing this year to hedge against the rising risk of construction bankruptcy.
The central bank said it was cutting interest rates on medium-term loans of 700 billion yuan ($ 110.2 billion) a year to some financial institutions by 10 basis points to 2.85%.
It also reduced the seven-day reverse repurchase rate.
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Source From: Capital
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