(CapitalWatch, Jan. 17, Hong Kong) China surpassed expectations and goals in terms of economic growth in 2021, rebounding from previous years and hitting its highest growth in a decade at 8.1%
This growth is the best China has seen since 2011, exceeded forecasts of 8.0%, and landed far above the government target of over 6%. The change comes in stark contrast to the year prior, at 2.2% growth, its weakest in over four decades.
Last week, officials also announced a trade surplus of $676.43 billion in 2021, up from $523.99 billion in 2020 and the highest surplus on record. December's surplus reached $94.4 billion, more than 20% year-over-year. Imports also defied expectations in December, totaling 19.5% compared to a predicted 26% rise. The year's total exports rose just under 30% in 2021, compared to a 3.6% in 2020 and imports gained around 30% after dropping 1% in 2020.
Data from the China Association of Automobile Manufacturers (CAAM) released last week also showed that December's monthly sales reached 2.7 million, bringing total figures for the year to 26.28 million. Overall exports soared year-over-year for China-made vehicles, up 101.1% from 2020.
This rise was in part attributed to the surging popularity of new energy vehicles (NEVs) in the country. Production of NEVs in China soared 159.5% compared to 2020, and sales jumped 157.5%. NEV sales in December alone jumped 114% from the same month of 2020 with 531,000 sold. NEV exports also boomed in 2021, up 304.6% compared to 2020.
These statistics show significant recovery for the world's second-largest economy, but certain challenges dampen the success. China has seen a significant property downturn partly brought on by new regulations on loan requirements. Real estate titan Evergrande's financial woes after missing many loan payment deadlines and being blocked from more borrowing through the new regulations causing its default also looms over the market. Recent data is showing a downturn in house prices, sales, investment, and construction.
New antitrust policies and ramped-up efforts to enforce them have been implemented in multiple areas, especially disrupting the technology sector. China has been placing harsh regulations on companies regarding data privacy and antitrust. They were created with the intention of opening up competition in the market and protecting consumers, but lower-level workers have also been caught in the crosshairs with significant layoffs and a declining outlook on the industry overall. The highly profitable after-school education sector was also wiped out last year under new policies banning companies from teaching topics covered in China's compulsory education system and requiring existing providers to undergo review and re-register as well as mandating that some restructure as non-profit.
Continuing Covid-19 outbreaks could also pose a risk to supply chains as the Omicron variant's spread persists worldwide. The country has seen some mild outbreaks in recent months and employs a highly proactive response to curb cases. Several cities went on high alert ahead of the travel season for the Lunar New Year as the variant has started reaching new areas including Beijing.