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A worker in protective overalls works near containers on a ship in Qingdao, in eastern China's Shandong province, Nov. 7, 2021.The Associated Press

China’s economy grew 8.1 per cent in 2021, above an official target, but a slowdown toward the end of the year led to the fourth quarter seeing the slowest growth since early 2020.

At a meeting of China’s rubber-stamp parliament last year, officials set a growth target of “above 6 per cent” for 2021, below predictions from the International Monetary Fund and others that the country’s economy could grow more than 8 per cent. No target had been set for 2020, when China was the only major economy to see growth, with a modest 2.2-per-cent rise.

In a statement Monday, the National Bureau of Statistics said: “On the whole, China’s economy continued to recover steadily in 2021, its economic development and epidemic prevention and control have remained at the world’s leading position, and major indicators have met the expected targets.

“At the same time, we should also note that the external environment is becoming more complex, grim and uncertain, and the domestic economy is facing triple pressure from shrinking demand, supply shock and weakening expectations,” the bureau said.

While the country got off to a strong start last year as activity rebounded from a pandemic-induced slump in 2020, the economy has lost steam because of a property downturn, debt curbs and strict COVID-19 restrictions, which have hit consumption.

In the fourth quarter of 2021, the economy grew just 4 per cent over the same period a year earlier, less than the already slow 4.9-per-cent growth posted in the third quarter, from July through September. Government data show most of the annual growth rate was driven by activity in the first half of the year.

China’s industrial output grew 4.3 per cent in December from a year earlier, after a 3.8-per-cent increase in November, official data showed. However, retail sales in December missed expectations, with only a 1.7-per-cent increase from a year earlier, the slowest pace since August, 2020.

Although the fourth-quarter growth figures were above some analysts’ gloomy predictions, the slowdown will nevertheless be cause for concern in Beijing.

China’s leaders have already indicated they will be focused on stability above all else this year, ahead of a key Communist Party meeting at which President Xi Jinping is expected to secure an unprecedented third term.

There will also be concern that slower growth in China could have knock-on effects for the global economy, which is already struggling as a result of the pandemic and other issues.

“After rebounding to an estimated 5.5 per cent in 2021, global growth is expected to decelerate markedly to 4.1 per cent in 2022, reflecting continued COVID-19 flare-ups, diminished fiscal support and lingering supply bottlenecks,” the World Bank warned in a report this month. “The near-term outlook for global growth is somewhat weaker, and for global inflation notably higher, than previously envisioned, owing to pandemic resurgence, higher food and energy prices, and more pernicious supply disruptions.”

The report added that “various downside risks cloud the outlook, including simultaneous Omicron-driven economic disruptions, further supply bottlenecks, a de-anchoring of inflation expectations, financial stress, climate-related disasters, and a weakening of long-term growth drivers.”

Omicron, in particular, could be a major cause of unpredictability in China.

Cases of the variant are just beginning to spread in the country, which has pursued an aggressive zero-COVID strategy since the start of the pandemic, with mass lockdowns and testing in response to any outbreaks. While this has kept overall case numbers low, it also means there is little natural herd immunity in the country. That has led to concerns that if Omicron begins to spread, it could do so very quickly. Such fears are compounded by research showing Chinese vaccines may offer less protection against Omicron, especially without a booster shot.

Despite the challenges, some analysts were cautiously optimistic about the year ahead, particularly with the government emphasizing stability and growth above all else after heavy and often chaotic interventions in 2021.

“So long as the COVID situation does not get worse, the Chinese economy should be able to pick up. And if things go well, China can still grow 5 to 7 per cent,” Zhu Tian, a professor of economics at the Shanghai-based China Europe International Business School, told The Globe and Mail last month. “Given the relatively more pro-active macro policies in China, I think the economy can still grow quite strongly in the next year.”

With reports from Alexandra Li and Reuters.

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