InvestorQ : How did China manage to grow its GDP at 2.3% when the entire world economies are slowing down?
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How did China manage to grow its GDP at 2.3% when the entire world economies are slowing down?

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sarah Leo answered.
4 months ago
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For the calendar year 2020, China announced 2.3% GDP growth creating a big edge over rest of the world. The question is how China managed to grow its GDP in a year when the whole world was struggling. Broadly, there were two reasons that can explain this China story and how they did in a short span of time. It was contraction in Q1 but growth in Q2, Q3 & Q4.

The first was a dual focus on exports and stimulating the economy. China was a lot more focused on a micro approach than a micro approach. For example, it concentrated on fiscal incentives to small and large sized industries and tried to directly stimulate consumer demand. With a $2 trillion trade surplus each year, China focused on boosting exports.

The second was the first in, first out approach, which gave them an edge over the rest of the world. When the pandemic first broke out in Wuhan, China responded with a near total lockdown; despite the economic risks. This nipped the pandemic in the bud. So, they were first in but also first out.

The focus was to gain export share when the world struggled. China gave substantial incentives to the export sector and simultaneously opened the floodgates of the economy. As a result, China not only bounced back but also got a larger share of the global export pie. That explains why China has been to growth in the last 3 quarters in succession.

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