China has made major progress in developing its economy and eradicating rural poverty over the past year despite the coronavirus pandemic, Chinese President Xi Jinping said in a New Year’s address Thursday.
China was the first major economy to register positive economic growth in 2020, with its gross domestic product expected to exceed 100 trillion yuan (about $19-trillion) for the year, Mr. Xi said on nationwide television, speaking from behind his desk in his wood-panelled office.
The International Monetary Fund forecast in October that China, the world’s second-largest economy, would grow 1.9 per cent in 2020, a sharp slowdown from its 6.1-per-cent gain in 2019, and then expand 8.2 per cent in 2021.
That compares with an IMF forecast for a global economic contraction of 4.4 per cent for 2020, the worst plunge since the Great Depression of the 1930s.
China has largely ended domestic transmission of the coronavirus, but Mr. Xi’s speech came as the government is ordering additional measures to prevent a resurgence over coming months.
China is encouraging tens of millions of migrant workers not to travel home during February’s Lunar New Year holiday to prevent further spread of the coronavirus, disrupting the most important family gathering of the year. Schools countrywide are also scheduled to begin the Lunar New Year vacation a week early and tourists have been told not to visit the capital Beijing during the holiday.
Mr. Xi called for increased international co-operation in fighting the virus, which is believed to have emerged from the central Chinese city of Wuhan in late 2019.
“People across the world should make joint efforts to drive away the dark clouds of the COVID-19 pandemic at an early date and build the planet Earth into a better home for all humanity,” Mr. Xi said.
Mr. Xi also hailed progress in lifting close to 100 million rural Chinese out of poverty over the past eight years and in “fully building a moderately prosperous society in all respects.”
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China's economy grows 2.3% in 2020 as recovery quickens – CNN
Asia shares pare losses as China economy rebounds – The Guardian
By Wayne Cole
SYDNEY (Reuters) – Asian shares pared early losses on Monday as data confirmed China’s economy had bounced back last quarter as factory output jumped, helping partially offset recent disappointing news on U.S. consumer spending.
Chinese blue chips gained 0.8% after the economy was reported to have grown 6.5% in the fourth quarter, on a year earlier, topping forecasts of 6.1%.
Industrial production for December also beat estimates, though retail sales missed the mark.
“Despite the latest dip in retail sales, we see plenty of upside to consumption as households run down the excess savings they accumulated last year,” said Julian Evans-Pritchard, senior China economist at Capital economics.
“Meanwhile, the tailwinds from last year’s stimulus should keep industry and construction strong for a while longer.”
MSCI’s broadest index of Asia-Pacific shares outside Japan trimmed losses and were off 0.3%, having hit a string of record peaks in recent weeks. Japan’s Nikkei slipped 0.8% and away from a 30-year high.
E-Mini futures for the S&P 500 dipped 0.2%, though Wall Street will be closed on Monday for a holiday. EUROSTOXX 50 futures eased 0.2% and FTSE futures 0.1%.
The pick-up in China was a marked contrast to the U.S. and Europe, where the spread of coronavirus has scarred consumer spending, underlined by dismal U.S. retail sales reported on Friday.
Also evident are doubts about how much of U.S. President-elect Joe Biden’s stimulus package will make it through Congress given Republican opposition, and the risk of more mob violence at his inauguration on Wednesday.
“The data bring into question the durability of the recent move higher in bond yields and the rise in inflation compensation,” said analysts at ANZ in a note.
“There’s a lot of good news around vaccines and stimulus priced into equities, but optimism is being challenged by the reality of the tough few months ahead,” they warned. “The risk across Europe is that lockdowns will be extended, and U.S. cases could lift sharply as the UK COVID variant spreads.”
That will put the focus on earnings guidance from corporate results this week, which include BofA, Morgan Stanley, Goldman Sachs and Netflix.
The poor U.S. data helped Treasuries pare some of their recent steep losses and 10-year yields were trading at 1.087%, down from last week’s top of 1.187%.
The more sober mood in turn boosted the safe-haven U.S. dollar, catching a bearish market deeply short. Speculators increased their net short dollar position to the largest since May 2011 in the week ended Jan. 12.
The dollar index duly firmed to 90.816, and away from its recent 2-1/2 year trough at 89.206.
The euro had retreated to $1.2074, from its January peak at $1.2349, while the dollar held steady on the yen at 103.78 and well above the recent low at 102.57.
The Canadian dollar eased to $1.2773 per dollar after Reuters reported Biden planned to revoke the permit for the Keystone XL oil pipeline.
Biden’s pick for Treasury Secretary, Janet Yellen, is expected to rule out seeking a weaker dollar when testifying on Capital Hill on Tuesday, the Wall Street Journal reported.
Gold prices were undermined by the bounce in the dollar leaving the metal at $1,828 an ounce, compared to its January top of $1,959.
Oil prices ran into profit-taking on worries the spread of increasingly tight lockdowns globally would hurt demand. [O/R]
Brent crude futures were off 52 cents at $54.58 a barrel, while U.S. crude eased 44 cents to $51.92.
(Editing by Shri Navaratnam and Gerry Doyle)
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