China GDP Grew 8.1% in 2021, Though Momentum Slowed in Fourth Quarter

BEIJING—China’s economy expanded 8.1% last year as a pandemic-plagued world snapped up its goods, though slowing growth in the final months of the year points to challenges ahead for its economy.

As expected, the annual gross domestic product figure easily topped Beijing’s official growth target of 6% or more, as exports surged to a record high. The 8.1% growth figure for 2021, which matched economists’ forecasts, adds to the country’s post-pandemic recovery after China eked out a 2.2% expansion in coronavirus-ravaged 2020.

The story of the Chinese economy last year had two distinct chapters: In the first half of 2021, GDP soared 12.7% from a year earlier, as China’s export-led recovery hit its stride and favorable comparisons with the darkest days of the initial Covid-19 outbreak flattered figures.

In contrast, in the second half of the year, the economy began to feel the impact of measures imposed by regulators in Beijing to rein in some of the country’s most important engines of growth, chief among them the real estate and technology sectors.

The impact of those moves coincided with soaring commodity prices, power outages, snarled global supply chains, shortages of semiconductors and global rises in Covid-19 infections, including the Delta and Omicron variants.

More difficult statistical comparisons to the stronger second half of 2020 also raised the bar. As a result, year-over-year GDP growth for the final two quarters of 2021 came in at just 4.9% and 4.0%, dragging down the full-year figure.

The challenge for China’s economy in 2022 is to keep the post-pandemic recovery rolling for a third year, even as momentum slows and Beijing continues to push longer-term reforms in the economy to boost its birthrate, reduce inequality, lower debt and make the country less dependent on the world.

Chinese leader

Xi Jinping

is widely expected to break with recent precedent and seek a third term in power—a political goal that demands a measure of economic stability and continued growth.

How China’s economy fares this year will also have ramifications for the rest of the world, which sells the country many of the natural resources it needs and, in turn, relies on its manufacturing might and central place in global supply chains.

Write to Jonathan Cheng at [email protected]

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