China 2020-Stagflation to Growth

Last year, just before the onset of the global pandemic, I wrote an article about stagflation (a good read on  GDP). There was widespread speculation back then on whether china was heading into stagflation.

China recently announced its 2020  Q4 GDP results, which was up by 6.5% Year-over-Year(YoY) compared to 4.2% in Q3. Analysts had forecasted a 6.1% increase in Q4 results. As we can see in below graph China had a  bad slump before the onset of pandic and have transformed their path to growth.

Overall the 2020 annual GDP was up 2.4%.

Eventough annual GDP numbers posted by china isn't that high infact we have to go all the way back to the 70's to find such low annual growth rate numbers.

However, as per WSJ ,China is the only large economy country expected to have positive annual GDP growth for year 2020.

What  has lead to the recovery?

Even though China was initially hit hard with the pandemic, at least for now, they seem to have the crisis under control. China's exports appear to have provided a more significant contribution to the recovery coupled with the manufacturing. The need for medical supplies and kits during lockdown allowed Chinese manufacturers to be still in business to provide essential supplies. As soon as the essential supplies business dwindled, most large economies eased out lockdown, further fueling the manufacturing and export growths in china.

In conclusion, it would be interesting to see how the US-China relationship plays out with the new incoming U.S. administration.  Also, many analysts speculate that China will overtake the U.S.  as the world's biggest economy by the end of the decade.