China's economy bounces back after coronavirus

China was the only major economy to avoid a contraction in 2020 as it brushed aside a collapse in global demand and strict lockdowns to curb Covid cases.

The world’s second-largest economy ended the year on the front foot but still suffered its worst annual growth in decades, expanding 2.3pc, Beijing revealed.

Growth in the fourth quarter beat expectations to hit 6.5pc year-on-year, the strongest level since 2018 even as global demand is hit by restrictions tightening in Europe and the US. China is expected to be the only major economy to enjoy growth in 2020 once final GDP estimates have been calculated despite being the first to use strict lockdowns to battle infections.

The latest leg of China’s recovery was driven by industrial production climbing 7.3pc but analysts warned it is experiencing its worst spurt in cases since the first wave with Beijing putting almost 30m people under new lockdowns.

While cases are still well below the high levels in Europe and the US, they are beginning to rise again ahead of holidays when millions of people will travel across the country.

Commerzbank economist Hao Zhou warned that the “road ahead remains rocky” as Beijing is likely to take measures to limit travel during the Chinese New Year celebrations to rein in cases.

“Geopolitical issues are likely to re-emerge as Mr Biden is set to adjust the China approach,” he said.

"It seems that Biden will reach out to traditional allies to form a broad-based China policy, which probably means that overall US-China tensions are likely to remain elevated in the years to come."

Iris Pang, economist at ING, said China “would not have recovered at such a pace” without Beijing's fiscal and monetary stimulus.

“This upbeat growth trend should continue in 2021. Control of people flows has started, so the risk of a widespread outbreak of Covid should be small.”

Despite being the first to put swathes of its economy into lockdown, China has survived the worst of the Covid crisis. Beijing is thought to have restarted its efforts to cut back on excessive debt after pausing its deleveraging campaign to cope with the trade war and Covid.

Analysts have pointed to signs of slowing loan growth with the outlook for the pandemic brightening in recent months.