China’s economy grew by 8.1% in 2021 as industrial production rose steadily through the end of the year and offset a drop in retail sales, according to China’s National Bureau of Statistics.
Fourth quarter GDP in China rose by 4% from a year earlier, according to the statistics bureau. That’s faster than the 3.6% increase forecast by a Reuters News Agency poll.
For the full year, China economists expected an average of 8.4% growth in 2021, according to financial data provider Wind Information.
Industrial production in China rose by 4.3% in December from a year earlier, the bureau said, also beating forecasts of 3.6% growth. Notably, auto production grew for the first time in December since last April, up by 3.4% year-over-year.
Investment in manufacturing grew by 13.5% in 2021 from a year ago, with special purpose machinery rising the most, up by 24.3% year-over-year. However, retail sales missed expectations and grew by 1.7% in December from a year ago. Analysts polled by Reuters had predicted a 3.7% increase.
At the same time, China’s unemployment rate in December matched the average for the year of 5.1%. The unemployment rate for people aged 16 to 24 remained far higher at 14.3%.
China’s “Zero Covid” policy aimed at controlling the pandemic prompted renewed travel restrictions within the country — including the lockdown of Xi’an city in central China in late December. In January, other cities were also locked down in full or partially, to control pockets of outbreaks tied to the highly transmissible Omicron variant.
Goldman Sachs cut its forecast for China’s 2022 GDP growth based on expectations that the Zero Covid policy will cause increased restrictions on business activity. However, the analysts said the greatest impact would be on consumer spending.
In 2021, overall retail sales grew by 12.5% from the previous year’s contraction, and also topped 2019 pre-pandemic levels.
However, only urban areas saw an increase in retail sales last year versus 2019 levels. Consumer spending in rural areas last year remained 1.8% below 2019 levels.
Within December’s retail sales data, automobile sales saw the greatest decline, down by 7.4% year-over-year, followed by a 6% drop in home appliances and a 3.1% decline in furniture. Sales of daily necessities saw the greatest increase last month in China, up 18.8% from a year ago.
