China's GDP in 2021 grew by 8.1%, becomes a $18 trillion economy

Despite a slump in the second half of the year, when the Chinese economy was besieged by a crippling power shortage, real estate sector turmoil and a drop in consumption because of Covid-19-related restrictions, China’s GDP still grew by 8.1% in 2021.

According to China’s National Bureau of Statistics (NBS), its fourth quarter GDP rose by 4% from a year ago. Though slower than growth in the third quarter, it was faster than the 3.6% increase forecast by a Reuters poll.

The growth in the first, second, and third quarter were 18.3%, 7.9% and 4.9%, respectively, with the fourth quarter growth the weakest in one-and-half years.

The NBS said that the country’s total GDP in 2021 reached 114.37 trillion yuan ($18 trillion). According to the Chinese official media, the 8.1% growth was the fastest in nearly a decade and landed well above the government’s annual target of achieving a growth rate above 6%.

The per capita disposable income of citizens went up by 9.1% to 35,128 yuan ($5,535) last year in nominal terms. “Weak consumption data also clouded the outlook, with retail sales in December missing expectations with only a 1.7% increase from a year earlier, the slowest pace since August 2020. Analysts in the poll had expected them to grow 3.7% after rising 3.9% in November,” a Reuters report said on Monday.

Industrial production saw sustained development, the NBS said, adding that high-tech manufacturing and equipment manufacturing experienced fast growth. “The total value added of industrial enterprises above the designated size increased by 9.6% over the previous year, an average two-year growth of 6.1%. In terms of sectors, the value added of mining was up by 5.3%, that of manufacturing up by 9.8% and that of production and supply of electricity, thermal power, gas and water up by 11.4%,” the NBS said.

“Generally speaking, in 2021, China sustained the continuous and steady recovery of the national economy and maintained the leading position in economic growth and epidemic prevention and control in the world, with major indicators reaching the expected targets,” the NBS said in a statement released on Monday.

It however added a note of caution. “We must be aware that the external environment is more complicated and uncertain, and the domestic economy is under the triple pressure of demand contraction, supply shock and weakening expectations”.

In 2020, due to the disruptions caused by the Covid-19 pandemic, which was first reported from the central city of Wuhan, the Chinese economy had grown by about 2.3%; incidentally China was the only major economy to have expanded that year.

Experts forecast that in the near term, the spread of highly transmissible Omicron variant across China including in Beijing, Tianjin and the southern Guangdong province well as the Delta variant’s resurgence in multiple cites has cast a shadow on the spending during the Lunar New Year holidays and the economic outlook for the first quarter of 2022. According to a report issued by the Chinese Academy of Sciences, China’s GDP growth is projected to moderate at around 5.5% in 2022.