Biz Quick Take: China’s 8.1% GDP growth offers confidence, reminder of risks ahead
Published: Jan 17, 2022 02:15 PM
GDP photo:VCG

GDP photo:VCG

China on Monday announced its GDP grew by 8.1 percent in 2021, the fastest pace in nearly a decade and arguably one of the fastest growths among major economies. The stronger-than-expected figures could not have come at a better time, as many in the country and abroad are painting a rather gloomy outlook for the world's second-largest economy amid multiple headwinds, most notably the spread of the Omicron variant.  

For some perspective, an 8.1 percent growth means China's economy grew by about $2 trillion in 2021, roughly the equivalent of the total GDP of Italy, the world's 8th-largest economy. The growth pace also well exceeded the official target of above 6 percent set earlier last year. Also worth noting is that China's GDP per capita, at around $12,551, overtook the global average and was nearing the threshold for a "high-income country" defined by the World Bank. 

For China, such a stellar performance injected necessary confidence to start 2022 on a strong foot. The new year is widely expected to be another tough one for the Chinese economy, with many forecasting the slowest GDP growth in decades. Some in the country are genuinely concerned about economic prospects as COVID-19 continues to spread. The Central Economic Work Conference also noted the growing downward pressure from three aspects: shrinking demand, supply disruptions, and weakening expectations.

Some foreign media outlets and institutions have smeared China's dynamic zero-case strategy against the virus by hyping up the potential economic costs of it. Last year's 8.1 percent growth should be a clear rebuttal to such irresponsible slanders against the country's efforts to save lives. What the growth rate shows is that though strict measures against the virus have had a certain impact on economic activities, the resilience of the Chinese economy should not be underestimated. 

For the world economy, the performance of the Chinese economy should also offer a ray of hope. After all, the Chinese economy's share of the global economy is expected to exceed 18 percent in 2021. China's economic growth contributed half of the world's total growth.  Beyond the statistics, China's fast economic growth in 2021 also offers a desperately needed boost for global sentiment amid lingering challenges.   

There are plenty of smearing and doomsaying in foreign media outlets about the Chinese economy, but the reality is that China has become the stabilizer of the global economy. A steadily growing Chinese economy is good news for the global economy, while a slowing one is bad news for all. As much as certain Western ideologues try to push for a decoupling from China, the Chinese economy has only grown more intertwined with the global economy. 

However, we must also be clear minded about the challenges ahead, and there are plenty. Despite the impressive economic data for 2021, there were also some worrisome signs, foreshadowing a tough year for the economy in 2022. 

In the fourth quarter, China's GDP only grew by 4 percent, slowing from a 4.9 percent growth in the third quarter, 7.9 percent in the second quarter, and 18.3 percent in the first quarter. Also, retail sales, a major gauge of China's consumption, the biggest growth driver, dropped by 0.18 percent, compared to a 12.5 percent growth for the full year. These figures appear to be confirming dim expectations for economic growth this year and reflect the serious challenges posed by the Omicron variant and other factors. 

Given such challenges in 2022, we cannot afford to be complacent over robust economic growth in 2021. The battle to tackle these challenges has already started as many cities around the country are combating new COVID-19 flare-ups and economic policymakers are also starting to address specific risks and boost promising growth points. 

However, we should also not be overwhelmed by the tasks and risks ahead. There are plenty of reasons for us to be confident that by the end of 2022, we will see another impressive performance by the Chinese economy.  The strong performance in 2021 gives China the confidence to tackle whatever challenges lie ahead, be it COVID-19 or relentless crackdowns by the US.