(Bloomberg) — China’s economy grew at a strong pace of 8.1% in 2021, a number seemingly at odds with headlines about a crashing property market and a crackdown on big technology companies.
Here are five charts, based on the latest official data this week, which give a deeper insight into how the world’s second-largest economy changed over the past year.
Property Hit
Output in the real-estate sector shrank in both the third and fourth quarters last year, the longest period of decline since 2008. Construction also fell, as Beijing’s efforts to squeeze financing to property companies dragged down the floor area of new buildings started by more than 14% in 2021 from the previous year — the biggest slump in six years.
That was a significant drag on growth. China’s property construction, once the production of building materials is added, is estimated to account for between 15-25% of GDP.
The upside of the housing downturn was that the economy likely became less carbon intensive, as the sector is a major driver of greenhouse gas emissions. Steel production, which climbed to more than 1 billion tons for the first time in 2020, declined slightly last year. China’s carbon dioxide emissions in the first 11 months of 2021 rose 6.2% year-on-year, below the pace of GDP growth, according to estimates from researchers at Carbon Monitor.
Coronavirus and Consumption
In 2020, Beijing relied on construction to revive the economy, while virus controls caused consumer spending to decline. Those growth drivers flipped around last year, with the property slowdown hitting investment and overall control of the virus allowing for a rebound in consumer spending.
More government spending on services, which are classified as consumption, also meant the latter became the biggest driver of growth last year.
Net exports was another unusually strong factor in driving the economy, with the record trade surplus last year accounting for about a fifth of the country’s economic expansion.
That raises questions about what will be the growth driver in 2021: the spread of the omicron variant threatens to stall consumer spending, while export growth is also expected to fade. Beijing has said it wants infrastructure investment to fill much of that gap, although it hasn’t increased the amount of bonds government will sell to help pay for that.
Manufacturing Revival
With the threat of trade embargoes of high-tech goods by the U.S. and allies, Beijing has been putting more emphasis on manufacturing. In the new five-year economic plan released last year it vowed to keep that sector’s share of the economy constant and avoid the de-industrialization seen in some other countries.
Official data show that effort is bearing fruit, with manufacturing’s share of output rising for a second consecutive year, following about a decade of decline.
The trend was supported by the relocation of low-end manufacturing from other parts of Asia as those countries struggled with the pandemic. But more technology intensive sectors also grew rapidly: the production of new energy vehicles grew more than 145%, while the production of microchips rose 33%, according to official data.
Private Enthusiasm
Billions of dollars in market value was lost from some of China’s largest privately-owned companies last year as Beijing took heavy-handed measures to rein in tech giants and private tutoring companies.
But looking at industrial manufacturing, private companies had a good year: their output grew 10.2%, faster than the average for the sector. The pace of investment by private companies was more than twice their state peers’ in 2021, suggesting optimism about business prospects. Most economists see that as a positive trend for the economy.
Common Prosperity
President Xi Jinping’s highest-profile policy initiative in 2021 was the new emphasis on “common prosperity” to try and curb inequality. China didn’t make much headway on that last year, according to official data.
A widely used metric of inequality, the gap between the top 20% and bottom 20% of earners expanded slightly, remaining at about twice the level seen in the European Union. The gap between rural and urban incomes narrowed only slightly.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.