China economy grows in 2020 as rebound from coronavirus gains

China’s quick recovery brought it closer to matching the US in economic output. (AP)
Short Url
Updated 18 January 2021

China economy grows in 2020 as rebound from coronavirus gains

  • Growth in the three months ending in December rose to 6.5 percent over a year earlier
  • China’s quick recovery brought it closer to matching the US in economic output

BEIJING: China eked out 2.3 percent economic growth in 2020, likely becoming the only major economy to expand as shops and factories reopened relatively early from a shutdown to fight the coronavirus while the United States, Japan and Europe struggled with rising infections.
Growth in the three months ending in December rose to 6.5 percent over a year earlier as consumers returned to shopping malls, restaurants and cinemas, official data showed Monday. That was up from the previous quarter’s 4.9 percent and stronger than many forecasters expected.
In early 2020, activity contracted by 6.8 percent in the first quarter as the ruling Communist Party took the then-unprecedented step of shutting down most of its economy to fight the virus. The following quarter, China became the first major country to grow again with a 3.2 percent expansion after the party declared victory over the virus in March and allowed factories, shops and offices to reopen.
Restaurants are filling up while cinemas and retailers struggle to lure customers back. Crowds are thin at shopping malls, where guards check visitors for signs of the disease’s tell-tale fever.
Domestic tourism is reviving, though authorities have urged the public to stay home during the Lunar New Year holiday in February, normally the busiest travel season, in response to a spate of new infections in some Chinese cities.
Exports have been boosted by demand for Chinese-made masks and other medical goods.
The growing momentum “reflected improving private consumption expenditure as well as buoyant net exports,” said Rajiv Biswas of IHS Markit in a report. He said China is likely to be the only major economy to grow in 2020 while developed countries and most major emerging markets were in recession.
The economy “recovered steadily” and “living standards were ensured forcefully,” the National Bureau of Statistics said in a statement. It said the ruling party’s development goals were “accomplished better than expectation” but gave no details.
2020 was China’s weakest growth in decades and below 1990’s 3.9 percent following the crackdown on the Tiananmen Square pro-democracy movement, which led to China’s international isolation.
Despite growth for the year, “it is too early to conclude that this is a full recovery,” said Iris Pang of ING in a report. “External demand has not yet fully recovered. This is a big hurdle.”
Exporters and high-tech manufacturers face uncertainty about how President-elect Joseph Biden will handle conflicts with Beijing over trade, technology and security. His predecessor, Donald Trump, hurt exporters by hiking tariffs on Chinese goods and manufacturers including telecom equipment giant Huawei by imposing curbs on access to US components and technology.
“We expect the newly elected US government will continue most of the current policies on China, at least for the first quarter,” Pang said.
The International Monetary Fund and private sector forecasters expect economic growth to rise further this year to above 8 percent.
China’s quick recovery brought it closer to matching the United States in economic output.
Total activity in 2020 was 102 trillion yuan ($15.6 trillion), according to the government. That is about 75 percent the size of the $20.8 trillion forecast by the IMF for the US economy, which is expected to shrink by 4.3 percent from 2019. The IMF estimates China will be about 90 percent of the size of the US economy by 2025, though with more than four times as many people average income will be lower.
Exports rose 3.6 percent last year despite the tariff war with Washington. Exporters took market share from foreign competitors that still faced anti-virus restrictions.
Retail spending contracted by 3.9 percent over 2019 but gained 4.6 percent in December over a year earlier as demand revived. Consumer spending recovered to above the previous year’s levels in the quarter ending in September.
Online sales of consumer goods rose 14.8 percent as millions of families who were ordered to stay home shifted to buying groceries and clothing on the Internet.
Factory output rose 2.8 percent over 2019. Activity accelerated toward the end of the year. Production rose 7.3 percent in December.
Despite travel controls imposed for some areas after new cases flared this month most of the country is unaffected.
Still, the government’s appeal to the public to avoid traditional Lunar New Year gatherings and travel might dent spending on tourism, gifts and restaurants.
Other activity might increase, however, if farms, factories and traders keep operating over the holiday, said Chaoping Zhu of JP Morgan Asset Management in a report.
“Unusually high growth rates in this quarter are likely to be seen,” said Zhu.


US-based kids gym targets Arab world child obesity with fitness franchise

Updated 8 min 49 sec ago

US-based kids gym targets Arab world child obesity with fitness franchise

  • Childhood obesity in Middle East among world's highest
  • First gym opening planned for Doha this summer

DUBAI: US-based Tumbles’ kids gym’ plans to tackle child obesity in the Middle East with the opening of its first fitness franchise in Qatar.
The Houston-based outfit combines gymnastics and exercise with STEM subjects such as science and technology and plans to open its first regional franchise in Qatar this summer.
The new facility will be located in the City Center Mall in Doha.
“There’s a lack of companies focused on wellness for kids going into the GCC,” said CEO, Manish Vakil. “We want to be part of the solution in the region and saying these areas should not be neglected. There are a lot of dollars and investments being made in these countries but not enough specifically in children’s health.”
Gulf states have some of the highest rates of child obesity in the world and governments are increasingly taking steps to improve the fitness of young people by such measures as applying higher taxes to sugar-based drinks and focing fast food chains to display the calories contained in the food they sell.


Lufthansa posts record annual loss

Updated 04 March 2021

Lufthansa posts record annual loss

  • Europe’s biggest airline said it expects to book an operating loss again in 2021
  • The group’s current fleet of 800 aircraft will be slashed to 650 by 2023

FRANKFURT: German flag carrier Lufthansa said Thursday it lost a record €6.7 billion ($8.1 billion) in 2020, as the coronavirus pandemic wiped out demand for travel and left aircraft grounded.
Europe’s biggest airline said it expects to book an operating loss again in 2021, although smaller than last year, as capacity runs at only 40-50 percent of pre-pandemic levels for the full year.
Underlining the long road to recovery, it added that capacity will climb to 90 percent of 2019’s level only in “the middle of the decade.”
After borders slammed shut as governments scrambled to halt the first wave of the COVID-19 crisis, the airline faced an uncertain future.
In June, it was offered a lifeline by the German government, which pumped in nine billion euros for a 25 percent stake.
“The past year was the most challenging in the history of our company — for our customers, our employees and our shareholders,” said Lufthansa chief executive Carsten Spohr.
In the airline’s home base, demand is sluggish with work from home orders curtailing lucrative business travel while official warnings are in place against leisure tourism in many countries worldwide.
Across Europe, restrictions are also in place as governments continue to battle rising infection numbers.
Lufthansa is currently flying about 20 percent of its capacity, with little improvement expected in the next one to two months.
But it expects demand to pick up again in the summer with a vaccination rollout progressing and more capacity for tests available.
“Internationally recognized digital vaccination and test certificates must replace travel bans and quarantine,” Spohr stressed, repeating calls by other airline bosses.
Lufthansa, which includes subsidiaries Swiss, Austrian, Brussels Airlines and Eurowings, operated only 31 percent of its overall capacity last year.
Revenues sank 63 percent to €13.6 billion for 2020, compared to €36.4 billion in 2019.
The operating loss came in at €5.5 billion, while a year ago, the airline’s comparative adjusted earnings before interest and tax stood in the black at €2.0 billion.
Although it has put much of its staff on curtailed hours and brought its headcount down from a pre-pandemic 141,000 to 110,000 currently, another 10,000 jobs are still on the line.
Over the last months, it has done deals with unions representing pilots and ground crew so as to head off forced redundancies until March 2022.
Pilots agreed to short hour arrangements and corresponding salary cuts while ground staff signed on to giving up bonuses and pay raises to save their jobs.
The group’s current fleet of 800 aircraft will be slashed to 650 by 2023.
Lufthansa’s woes mirror those of its competitors elsewhere.
Industry group IATA, which represents 290 major airlines worldwide, warned last week that global air passenger traffic will recover more slowly than expected this year because coronavirus variants have created strong headwinds.
The International Air Transport Association now estimates that traffic will reach between 33 and 38 percent of the levels recorded in 2019.
Its previous 2021 forecast was for traffic to reach 51 percent of the levels seen before the coronavirus pandemic struck.


Texas power grid operator fires CEO after deadly blackouts

Updated 04 March 2021

Texas power grid operator fires CEO after deadly blackouts

  • The mid-February storm temporarily knocked out up to half the state’s generating plants

BENGALURU: Texas’ power grid operator ousted chief executive Bill Magness on Wednesday, as the fallout continues from a deadly blackout last month that left residents without heat, power or water for days.
His departure followed fierce criticism by state lawmakers of the handling of the crisis by the Electric Reliability Council of Texas (ERCOT), which has led one large electricity provider to seek bankruptcy and put several others near to it.
The mid-February storm temporarily knocked out up to half the state’s generating plants, triggering outages that killed dozens and pushed power prices to 10 times the normal rate.
“ERCOT’s decision to oust CEO Bill Magness signals accountability for the disaster that swept through our state two weeks ago,” Texas Attorney General Ken Paxton said in a statement on Twitter.
“(This step) offers the opportunity for new leadership that can more efficiently prepare and direct our state’s resources when dangerous weather strikes,” he added.
Texas Lt. Governor Dan Patrick, who on Monday called for the heads of ERCOT and the Public Utility Commission to resign, also welcomed the move.
The legislature now can begin “fixing what went wrong,” Patrick said.
ERCOT said in a statement cited by multiple media organizations that its board had directed that Magness be given a 60 days’ termination notice. The board would begin an immediate search for a new CEO.
Brad Jones, former head of New York’s power grid, is the leading candidate to replace Magness as ERCOT’s CEO, Bloomberg reported, citing people familiar with the board’s thinking.
Magness was grilled for hours last week for leaving power prices at up to 450 times the usual rate after the threat to the state’s grid had ended.
Seven of ERCOT’s 15 directors have resigned in the last week and the head of the state’s Public Utility Commission, which supervised ERCOT, resigned on Monday.
The winter storm caused widespread blackouts across Texas, a state unaccustomed to extreme cold, knocking out power to more than 4 million people at its peak.


Three Chinese companies may invest $1 billion in Sudan says minister: Asharq Business

Updated 04 March 2021

Three Chinese companies may invest $1 billion in Sudan says minister: Asharq Business

  • Agriculture, petroleum and mining targeted
  • Chines firms lured by investment law reforms

DUBAI: Sudan’s Minister of investment, Al Hadi Muhammed Ibrahim, met with a Chinese delegation from three companies, that may invest up to $1 billion in Sudan, he told Asharq Business on Wednesday.
The investments would target the agriculture, mining and petroleum fields, he said.
Ibrahim confirmed that the projects would be offered in a transparent way and would be open to competitive bidding.
He stressed to the visiting delegation that Sudan’s legal system set a clear path to protect the investor and the state.
Ibrahim said that the Chinese delegation had been attracted by recent changes to the country’s investment law which provides a package of incentives and tax exemptions.
“We have restructured the ministry and started improving the investment environment,” he said. “So the investor will come and find all the procedures in one portal with easy and strict procedures,” he said.


Saudi developer Alandalus Property profits fall on pandemic retail and hospitality hit

Updated 58 min 47 sec ago

Saudi developer Alandalus Property profits fall on pandemic retail and hospitality hit

  • Mall operations hit by pandemic
  • Regional retail groups consolidate

DUBAI: Saudi developer Alandalus Property reported a 78 percent decline in net profit last year to SR14.3 million ($3.8 million) as the pandemic weighed on its hotels and malls business.
It discounted rents for mall tenants in response to the COVID-19 pandemic, the company said in a filing to the Saudi stock exchange on Thursday.
Still, overall sales dipped just 4.7 percent to SR167.8 million, reflecting strong underlying demand for property in the Kingdom.
Real estate and retail groups throughout the region have been hit hard by the pandemic with many forced to reduce operations and cut costs.
Dubai developer Emaar Properties on Tuesday said it was buying out minority shareholders of its shopping center unit, less than a decade after floating shares in the company.
The all-share deal came as both businesses have seen profits plunge over the past year due to the coronavirus pandemic as fewer overseas visitors travel to Dubai.