The Chinese government will release the nation’s GDP growth rate for the fourth quarter of 2020 today. Current forecasts place
The Chinese government will release the nation’s GDP growth rate for the fourth quarter of 2020 today.
Current forecasts place the rate at 3%, doubling the growth in the same quarter of 2019, but declining by 3.4% from the same quarter of 2018. China may experience a modest recovery in 2021. The current rate has been buoyed by increased exports, especially of personal protective equipment (PPE) and electronics products to Western trading partners struggling to contain the spread of COVID-19. As governments roll out vaccinations, global demand for PPE and electronics will steady. Beijing will gradually withdraw policy support and restrict massive bond issuance by state-owned firms to control default risks for weaker firms, which will slow down imports.
Beijing’s growth also depends on US-China relations. The Biden administration may roll back Trump-era restrictions on China’s exports, but continue to adopt a firm stance against Chinese trade policy in general. Thus, the fear of trade disruptions still exists.
Expect Beijing to make greater efforts to make the economy less dependent on its exports to the US and overseas consumers, and more reliant on its own domestic market by expanding middle and low-income demand.
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