(Bloomberg) -- China’s economy grew 2.3% last year, as the successful control of Covid-19 positioned it as the only major country to avoid an economic contraction.
That expansion was boosted by 6.5% growth in the final quarter of 2020 from a year earlier, the statistics bureau said Monday, marking a return to pre-pandemic growth rates. Economists surveyed by Bloomberg had predicted 6.2% growth for the quarter and 2.1% for the full year.
The recovery was aided early on by fiscal and monetary stimulus that boosted investment in infrastructure and real estate. Once China had virus cases under control and factories were able to resume production, growth was fueled by strong overseas consumer demand for Chinese exports, especially medical equipment and work-from-home devices.
Emerging from the pandemic larger than when it started is a capstone to a dramatic year for the world’s second-largest economy, which began 2020 with a historic first-quarter slump when the coronavirus lockdowns brought most activity to a halt.
With global output likely contracting 4.2% last year, China’s gains mean it increased its share of the world economy to 14.5%, according to World Bank estimates, compared with 22% for the U.S. Based on projections from the International Monetary Fund, China will now overtake the U.S. by 2028, two years earlier than previously predicted, according to Nomura Holdings Inc.
Economists expect China’s GDP will expand 8.2% this year, continuing to outpace global peers, even as other large economies begin to recover with vaccines being rolled out.
The ongoing recovery in 2021 will depend on whether China can prevent a large-scale spread of virus infections, and on whether it can pass the baton of spending from local governments and large state companies to smaller businesses and consumers. Household spending and investment by manufacturing companies has lagged overall growth in 2020.
An increasingly tense trade relationship with the U.S. could also weigh on the outlook. In his final weeks in office, President Donald Trump has tightened restrictions on Chinese businesses to curb the nation’s dominance in high-tech industries, roiling financial markets. It’s still unclear how the incoming administration under Joe Biden will navigate those issues.
Global demand for Chinese-made goods is expected to remain strong as the pandemic continues to keep large parts of the world’s population locked down. Already the top exporter, the value of China’s goods shipments increased 3.6% in 2020, according to official data. Imports declined 1.1%, resulting in a $535 billion annual trade surplus, the highest since 2015.
The fiscal and monetary stimulus to support the economy through the pandemic has been accompanied by a surge in debt, a development that authorities are now seeking to address as the recovery takes hold. At a December meeting to lay out economic goals for 2021, the ruling Communist Party signaled that stimulus would be gradually withdrawn, although it would avoid any “sharp turns” in policy.