China's GDP grew 2.3% in 2020, but post-Covid recovery still in danger

Beijing is the only G-20 country to record positive growth. Among the advanced economies, only Taiwan has done better. The problem of debt. Domestic consumption and the number of migrant workers dropps. Collapse of investments in the Belt and Road Initiative.

Beijing (AsiaNews / Agencies) - China's gross domestic product grew by 2.3% in 2020, recovering sharply after the -6.8% registered in the first quarter of last year due to the coronavirus pandemic. In all likelihood, China is the only G-20 country to have recorded positive growth: it is not, however, the best performing economy among advanced economies. Taiwan, which has a history of great success in the fight against Covid-19, has had an increase in GDP between 2.4 and 2.5%, with prospects of accelerating to 3.2% in 2021.

China’s recovery is attributed to the speed with which the authorities introduced measures to contain the health emergency. Beijing focused on public investments, tax cuts and facilitations to access bank credit to sustain production. However, this expansionary policy has increased the national debt to record levels. The Chinese Academy of Social Sciences calculates that in 2020 the national debt rose to 275% of GDP: at the end of 2019 it was around 245%.

Last year's production figure is the worst in decades. President Xi Jinping's stated goal of stimulating domestic consumption has not been achieved. In 2020, per capita consumption in the country fell by 1.6%. Growth was again fuelled by exports, especially health products, and by the internal sale of cars and homes: two heavily state subsidized sectors. Beijing's dependence on external markets creates uncertainty about the future, as most foreign partners struggle to bring the economy back to pre-crisis levels.

There are also doubts about the actual number of unemployed. Official data speak of an unemployment rate of 5.6%, less than 6% of forecasts. However, the calculation includes only “urban” workers, excluding migrant workers who move from the countryside to the cities without obtaining a new residence. According to the National Statistics Office, in 2020 their number stopped at 285 million: in 2019 they were more than 290 million; there are therefore five million migrants who in all probability have not found a new job.

According to observers, the Asian giant's difficulties are signalled by another indirect fact: the collapse of investments in the Belt and Road Initiative, the large project wanted by Xi to dominate world trade. The China Global Investment Tracker calculated that last year Chinese investments in this area reached 46.5 billion dollars: in 2019 they were 103 billion; 117 in 2018.