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China's economy slowed at end of 2021 amid COVID outbreaks

January 17, 2022

The Chinese economy was shaken by a series of shocks towards the end of 2021, including a spate of virus outbreaks, a property market slump and far-reaching regulatory crackdowns on some sectors.

A worker wearing a protective suit collects a throat swab sample at a COVID-19 testing site in Xi'an in northwestern China's Shaanxi Province
China rebounded quickly from the coronavirus pandemic, but economic activity has since slowedImage: Li Yibo/Xinhua/AP/picture alliance

China's economy grew by 8.1% in 2021, beating forecasts but slowing down in the final months of the year, according to official data released Monday.

The world's second-largest economy expanded at its weakest pace in a year-and-a-half in the final quarter, as it faced headwinds from regulatory curbs, property sector woes, and renewed COVID-19 outbreaks.

What did the latest data show?

The economy was off to a strong start in 2021, rebounding from a pandemic-induced slump the previous year.

China posted record growth of 18.3% in the first quarter, compared to the previous year, and 7.9% in the second quarter, the National Bureau of Statistics data showed.

But it faced an abrupt slowdown in the second half, growing by 4.9% in the third quarter and further weakening to 4.0% in the October-December period.

Central bank cuts interest rate

China's central bank on Monday unexpectedly cut a key interest rate for the first time since the height of the pandemic. 

The People's Bank of China (PBOC) said it was lowering the interest rate on 700 billion yuan ($110.2 billion; €96.60 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions to 2.85% from 2.95% in previous operations.

China's 'zero-COVID' policy

The country's economic recovery also has been hampered by renewed coronavirus outbreaks, which prompted Chinese leaders to impose strict border controls or targeted lockdowns on cities including Tianjin, a manufacturing center.

"Economic momentum remains weak amid repeated virus outbreaks and a struggling property sector," Julian Evans-Pritchard of Capital Economics was quoted as saying by the Associated Press.

Birth rate decline

China's birth rate dropped to a record low in 2021, official data showed Monday, as experts warned of the economic consequences of a faster-than-expected aging population. 

The birth rate in the country slipped to 7.52 births per 1,000 people, data from the National Bureau of Statistics showed.

This was down from 8.52 in 2020 and the lowest rate since comparative records began in 1978.

adi/ (Reuters, AFP, AP)