InvestorQ : Is it true that the GDP growth of China has really slowed down in the year 2020?
NISHA Nayak made post

Is it true that the GDP growth of China has really slowed down in the year 2020?

Priyanka N answered.
2 months ago

If you compare the current growth of GDP with the historical growth shown by China then you are probably right. According to the data that has been put out by the Chinese government, the Chinese economy grew at the rate of 2.3% in calendar year 2020. This is apparently the lowest rate of growth for China in the last 44 years; that is since 1976.

However, year 2020 was a hardly a normal year. The pandemic in fact began in the Hubei province of China and the factories and supply chains coming from China were the worst affected by the pandemic. From that perspective, it is commendable because China may end up being the only large economy to display positive growth in 2020.

If you look at any of the other large economies with annual GDP of over $2 trillion, then almost all of these large economies are likely to show negative growth. Even India is expected to show negative GDP contraction of -7.7% in the fiscal year 2020-21 and the CY2020 contraction should be much deeper than that.

Fro, that perspective, China achieving the level of 2.3% GDP growth in real terms is actually quite commendable. It has also been the fastest to pick up and revive growth as was visible in the December exports data. The Chinese economy contracted by -6.8% in the first quarter ended Mar-20 but picked up sharply after that led by exports thrust.

In the next 3 quarters, China reported positive growth rates of 3.2%, 4.9% and 6.5% respectively, which is a strong turnaround. China combined fiscal and monetary stimulus aggressively and that was responsible for pushing growth and exports back to pre-COVID levels very rapidly. GDP for 2020 crossed $15.4 trillion and China has narrowed with the US.