Nation likely to be only major economy to have achieved positive results in 2020
China's economic growth is expected to equal pre-COVID-19 levels in the last quarter of 2020, and Beijing will ramp up efforts to help businesses still in distress and promote a more balanced recovery, experts said on Friday.
The Chinese economy will likely soon be confirmed as the world's only major economy to have achieved positive growth during COVID-ravaged 2020, as the nation is scheduled to unveil GDP and other key economic data for the full year and the fourth quarter on Monday.
Experts expected the economy to grow by more than 2 percent in 2020 on the back of a rally in investment and strong exports, with full-year GDP exceeding 100 trillion yuan ($15.45 trillion) for the first time. Fourth-quarter economic growth may be about 6 percent, the level seen in the last quarter of 2019, prior to the nationwide COVID-19 outbreak.
Liu Yuanchun, vice-president of the Renmin University of China, said the country's achievement in combating the pandemic and promoting economic recovery has demonstrated the country's institutional advantage and economic resilience, laying a good foundation for embarking on the 14th Five-Year Plan period (2021-25).
But a GDP growth figure reaching pre-COVID-19 levels does not point to a full economic recovery, experts said, as hard-hit sectors continue to feel pressure, especially small manufacturers and services providers.
"It is too early to conclude that this is a full recovery," said Iris Pang, chief China economist at Dutch bank ING.
External demand has not fully recovered and could restrict China's industrial production, especially for smaller manufacturers, Pang said, adding that industries linked to international travel are still in a difficult situation.
December's official manufacturing purchasing managers index indicated that small manufacturers saw a contraction in activity, though the overall manufacturing sector continued to expand, according to the National Bureau of Statistics.
Looking at 2021, growth figures are expected to rebound strongly from a year earlier thanks to a low comparative base for 2020, but the underlying improvement momentum may be subject to uncertainties and could leave some small businesses and employment situations remaining under pressure, experts said.
Chen Dong, senior Asia economist at Pictet Wealth Management, said December's slowdown in long-term corporate credit growth implied that property investment may lose some momentum in the first quarter of 2021, while the peak of export growth may have passed.
Recent local resurgences of COVID-19 cases have added another layer of uncertainty, but this should be a minor factor as well-established procedures are in place to achieve quick containment, Chen said.
To promote a more balanced recovery and ensure development achievement is widely shared by the people, Beijing is expected to make stabilizing employment as the top policy priority this year and roll out more plans to help small businesses, experts said.
President Xi Jinping on Monday stressed the importance of following a people-centered philosophy. The development philosophy for building a modern socialist country is only correct when it insists that development should be for the people, rely on the people and be shared by the people, Xi said.
Xi, who is also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, made the remark when addressing the opening of a study session at the Party School of the CPC Central Committee, attended by provincial and ministerial-level officials.
"The government is expected to continue placing stabilizing employment in first place this year," said Yao Jingyuan, former chief economist at the NBS and a researcher for the Counselors' Office of the State Council.
China faces rising unemployment pressure this year－not only as the number of college graduates is expected to surpass 9 million in 2021, up more than 300,000 year-on-year－but because the number of college graduates who go abroad for further education will substantially drop due to the pandemic, Yao said.
"To stabilize employment, the government must boost the strength of policies to safeguard the development of market entities, especially small and micro businesses," he said, calling on making those policies work more accurately as well.
Cheng Shi, chief economist at ICBC International, said the country is expected to enrich its monetary policy tool kit of lending direct support to small businesses and step up reforms of its financial system to better match small businesses' financing needs this year.
With policy measures to address the unbalanced pattern of recovery and further revival of the consumer market, the Chinese economy is expected to achieve an 8.2 percent annual growth in 2021, said Wang Tao, chief China economist at global investment bank UBS.
This will mark a jump from an estimated 2.1 percent for the whole of 2020 and about 6 percent in the fourth quarter of 2020, according to Wang.
Ouyang Shijia contributed to this story.