China's economic growth expected to hit 44-year low

Kumutha Ramanathan
·2 min read
Consumers choose vegetables at a supermarket in Shanghai, China, March 10, 2016. China's consumer inflation accelerated faster-than-expected in February due to rising food prices but another fall in upstream prices is likely to add to concerns about growing deflationary pressures, which could trigger further policy easing. REUTERS/Aly Song      TPX IMAGES OF THE DAY
Consumers choose vegetables at a supermarket in Shanghai, China. Photo: Aly Song/Reuters

The Chinese economy is expected to grow at its slowest pace in over four decades despite recovering from COVID-19, according to a Reuters poll.

The world’s second largest economy is projected to expand by 2.1% in 2020, slightly missing analysts’ estimates of 2.2% growth projected in the last poll taken in July. Reuters surveyed 37 analysts for the study.

China is the only major economy to grow in 2020, with its recovery having accelerated in the third quarter as consumers moved past COVID-19 fears. Despite this, the country still faces the looming threat of resurgent coronavirus cases both nationally and globally as well as ongoing tensions with the United States over trade, technology and a number of other issues.

The poll forecast fourth-quarter GDP to rise 5.8% year-on-year, quickening from 4.9% in July-September.

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As the global economy recovers from the pandemic, China’s growth is projected to pick up to 8.4% in 2021, according to the poll.

The news comes as China's top leaders meet this week to discuss the country's economic course for 2021-2025. The nation needs to balance growth and reforms to avoid stagnation amid rising tensions with the US.

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The government has been focused on stabilising economic growth despite debt rising this year to support the coronavirus-hit economy, central bank chief Yi Gang said last week.

The measures employed include more fiscal spending, tax relief, lending rate cuts and reducing banks’ reserve requirements to revive growth and support employment.

The central bank had initially intervened as travel restriction took a hit to the national economy, but it has since held off on further easing.

Analysts expect China will keep its one-year loan prime rate (LPR) steady at 3.85% until the end of 2021, according to Reuters. It adds that the central bank kept the LPR unchanged for the sixth straight month at its October fixing, after cutting it by a total of 46 basis points since last August.