** Figures updated in January 2022 by the World Economic Outlook Update.
*** According to the National Bureau of Statistics of China’s final annual data issued on December 17, 2021, the GDP growth rate for 2020 has been reduced to 2.2 percent from 2.34 percent before.
The World Economic Outlook Database October 2021 Edition provided the figures for previous years.
What will China’s GDP be in 2021?
According to GDP statistics from 2021, China’s most productive provinces and cities are listed below. According to the National Bureau of Statistics, China’s GDP in 2021 was RMB 114.4 trillion (US$17.7 trillion), up around RMB 13 trillion (US$3 trillion) from 2020, or 8.1 percent year-on-year growth (NBS).
In 2021, what will be the GDP growth rate?
In addition to updated fourth-quarter projections, today’s announcement includes revised third-quarter 2021 wages and salaries, personal taxes, and government social insurance contributions, all based on new data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages program. Wages and wages climbed by $306.8 billion in the third quarter, up $27.7 billion from the previous estimate. With the addition of this new statistics, real gross domestic income is now anticipated to have climbed 6.4 percent in the third quarter, a 0.6 percentage point gain over the prior estimate.
GDP for 2021
In 2021, real GDP climbed by 5.7 percent, unchanged from the previous estimate (from the 2020 annual level to the 2021 annual level), compared to a 3.4 percent fall in 2020. (table 1). In 2021, all major components of real GDP increased, led by PCE, nonresidential fixed investment, exports, residential fixed investment, and private inventory investment. Imports have risen (table 2).
PCE increased as both products and services increased in value. “Other” nondurable items (including games and toys as well as medications), apparel and footwear, and recreational goods and automobiles were the major contributors within goods. Food services and accommodations, as well as health care, were the most significant contributors to services. Increases in equipment (dominated by information processing equipment) and intellectual property items (driven by software as well as research and development) partially offset a reduction in structures in nonresidential fixed investment (widespread across most categories). The rise in exports was due to an increase in products (mostly non-automotive capital goods), which was somewhat offset by a drop in services (led by travel as well as royalties and license fees). The increase in residential fixed investment was primarily due to the development of new single-family homes. An increase in wholesale commerce led to an increase in private inventory investment (mainly in durable goods industries).
In 2021, current-dollar GDP climbed by 10.1 percent (revised), or $2.10 trillion, to $23.00 trillion, compared to 2.2 percent, or $478.9 billion, in 2020. (tables 1 and 3).
In 2021, the price index for gross domestic purchases climbed 3.9 percent, which was unchanged from the previous forecast, compared to 1.2 percent in 2020. (table 4). Similarly, the PCE price index grew 3.9 percent, which was unchanged from the previous estimate, compared to a 1.2 percent gain. With food and energy prices excluded, the PCE price index grew 3.3 percent, unchanged from the previous estimate, compared to 1.4 percent.
Real GDP grew 5.6 (revised) percent from the fourth quarter of 2020 to the fourth quarter of 2021 (table 6), compared to a fall of 2.3 percent from the fourth quarter of 2019 to the fourth quarter of 2020.
From the fourth quarter of 2020 to the fourth quarter of 2021, the price index for gross domestic purchases climbed 5.6 percent (revised), compared to 1.4 percent from the fourth quarter of 2019 to the fourth quarter of 2020. The PCE price index grew 5.5 percent, unchanged from the previous estimate, versus a 1.2 percent increase. The PCE price index grew 4.6 percent excluding food and energy, which was unchanged from the previous estimate, compared to 1.4 percent.
What is China’s GDP forecast for 2022?
The Wall Street bank cut its GDP growth prediction for 2022 to 5.1 percent, down from 5.3 percent previously and below the Chinese leadership’s aim of around 5.5 percent. GDP increased by 0.6 percent in the third quarter compared to the previous three months.
In 2021, what would India’s GDP be?
In its second advance estimates of national accounts released on Monday, the National Statistical Office (NSO) forecasted the country’s growth for 2021-22 at 8.9%, slightly lower than the 9.2% estimated in its first advance estimates released in January.
Furthermore, the National Statistics Office (NSO) reduced its estimates of GDP contraction for the coronavirus pandemic-affected last fiscal year (2020-21) to 6.6 percent. The previous projection was for a 7.3% decrease.
In April-June 2020, the Indian economy contracted 23.8 percent, and in July-September 2020, it contracted 6.6 percent.
“While an adverse base was expected to flatten growth in Q3 FY2022, the NSO’s initial estimates are far below our expectations (6.2 percent for GDP), with a marginal increase in manufacturing and a contraction in construction that is surprising given the heavy rains in the southern states,” said Aditi Nayar, Chief Economist at ICRA.
“GDP at constant (2011-12) prices is estimated at Rs 38.22 trillion in Q3 of 2021-22, up from Rs 36.26 trillion in Q3 of 2020-21, indicating an increase of 5.4 percent,” according to an official release.
According to the announcement, real GDP (GDP) or Gross Domestic Product (GDP) at constant (2011-12) prices is expected to reach Rs 147.72 trillion in 2021-22, up from Rs 135.58 trillion in the first updated estimate announced on January 31, 2022.
GDP growth is expected to be 8.9% in 2021-22, compared to a decline of 6.6 percent in 2020-21.
In terms of value, GDP in October-December 2021-22 was Rs 38,22,159 crore, up from Rs 36,22,220 crore in the same period of 2020-21.
According to NSO data, the manufacturing sector’s Gross Value Added (GVA) growth remained nearly steady at 0.2 percent in the third quarter of 2021-22, compared to 8.4 percent a year ago.
GVA growth in the farm sector was weak in the third quarter, at 2.6 percent, compared to 4.1 percent a year before.
GVA in the construction sector decreased by 2.8%, compared to 6.6% rise a year ago.
The electricity, gas, water supply, and other utility services segment grew by 3.7 percent in the third quarter of current fiscal year, compared to 1.5 percent growth the previous year.
Similarly, trade, hotel, transportation, communication, and broadcasting services expanded by 6.1 percent, compared to a decline of 10.1 percent a year ago.
In Q3 FY22, financial, real estate, and professional services growth was 4.6 percent, compared to 10.3 percent in Q3 FY21.
During the quarter under examination, public administration, defense, and other services expanded by 16.8%, compared to a decrease of 2.9 percent a year earlier.
Meanwhile, China’s economy grew by 4% between October and December of 2021.
“India’s GDP growth for Q3FY22 was a touch lower than our forecast of 5.7 percent, as the manufacturing sector grew slowly and the construction industry experienced unanticipated de-growth.” We have, however, decisively emerged from the pandemic recession, with all sectors of the economy showing signs of recovery.
“Going ahead, unlock trade will help growth in Q4FY22, as most governments have eliminated pandemic-related limitations, but weak rural demand and geopolitical shock from the Russia-Ukraine conflict may impair global growth and supply chains.” The impending pass-through of higher oil and gas costs could affect domestic demand mood, according to Elara Capital economist Garima Kapoor.
“Strong growth in the services sector and a pick-up in private final consumption expenditure drove India’s real GDP growth to 5.4 percent in Q3.” While agriculture’s growth slowed in Q3, the construction sector’s growth became negative.
“On the plus side, actual expenditure levels in both the private and public sectors are greater than they were before the pandemic.
“Given the encouraging trends in government revenues and spending until January 2022, as well as the upward revision in the nominal GDP growth rate for FY22, the fiscal deficit to GDP ratio for FY22 may come out better than what the (federal) budget projected,” said Rupa Rege Nitsure, group chief economist, L&T Financial Holdings.
“The growth number is pretty disappointing,” Sujan Hajra, chief economist of Mumbai-based Anand Rathi Securities, said, citing weaker rural consumer demand and investments as reasons.
After crude prices soared beyond $100 a barrel, India, which imports virtually all of its oil, might face a wider trade imbalance, a weaker rupee, and greater inflation, with a knock to GDP considered as the main concern.
“We believe the fiscal and monetary policy accommodation will remain, given the geopolitical volatility and crude oil prices,” Hajra added.
According to Nomura, a 10% increase in oil prices would shave 0.2 percentage points off India’s GDP growth while adding 0.3 to 0.4 percentage points to retail inflation.
Widening sanctions against Russia are likely to have a ripple impact on India, according to Sakshi Gupta, senior economist at HDFC Bank.
“We see a 20-30 basis point downside risk to our base predictions,” she said. For the time being, HDFC expects the GDP to rise 8.2% in the coming fiscal year.
China’s Economy Prior to Reforms
Prior to 1979, China had a centrally planned, or command, economy under Chairman Mao Zedong’s direction. The state directed and controlled a substantial portion of the country’s economic output, setting production objectives, controlling prices, and allocating resources across the sector. All of China’s individual household farms were collectivized into big communes in the 1950s. During the 1960s and 1970s, the central government made large-scale expenditures in physical and human capital to promote rapid industrialization. As a result, by 1978, over three-quarters of industrial output was produced by centrally controlled, state-owned enterprises (SOEs), with output targets set centrally. Private businesses and foreign-owned businesses were typically prohibited. The Chinese government’s main goal was to make China’s economy largely self-sufficient. In general, foreign trade was confined to obtaining items that could not be manufactured or obtained in China. The economy was distorted as a result of such practices. There were few incentives for firms, workers, and farmers to become more productive or concerned about the quality of what they produced because most aspects of the economy were managed and run by the central government. As a result, there were no market mechanisms to efficiently allocate resources, and thus there were few incentives for firms, workers, and farmers to become more productive or concerned about the quality of what they produced (since they were mainly focused on production goals set by the government).
China’s real GDP grew at an average annual rate of 6.7 percent from 1953 to 1978, according to Chinese government statistics, though the accuracy of these figures has been questioned by many analysts, who contend that Chinese government officials (especially at the subnational levels) often exaggerated production levels for a variety of political reasons during this time. China’s actual average yearly real GDP growth during this period, according to economist Angus Maddison, was around 4.4 percent. 5 Furthermore, China’s economy experienced significant downturns under Chairman Mao Zedong’s leadership, including during the Great Leap Forward from 1958 to 1962 (which resulted in a massive famine and the deaths of up to 45 million people)6 and the Cultural Revolution from 1966 to 1976 (which resulted in a massive famine and the deaths of up to 45 million people) (which caused widespread political chaos and greatly disrupted the economy). China’s per capita GDP doubled between 1950 and 1978 on a purchasing power parity (PPP) basis,7 a typical indicator of a country’s living standards. However, Chinese living standards declined by 20.3 percent between 1958 and 1962, and by 9.6 percent between 1966 and 1968. (see Figure 1). Furthermore, as seen in Figure 2, the rise in Chinese living standards paled in contrast to those in the West, such as Japan.
The Chinese government decided to break with its Soviet-style economic policies in 1978 (shortly after Chairman Mao’s death in 1976) by gradually reforming the economy according to free market principles and opening up trade and investment with the West, in the hopes of significantly increasing economic growth and raising living standards. “Black cat, white cat, what does it matter what color the cat is as long as it catches mice?” said Chinese leader Deng Xiaoping, the architect of China’s economic reforms. 8
The Introduction of Economic Reforms
China started a series of economic reforms in 1979. Farmers were given price and ownership incentives by the central government, allowing them to sell a portion of their harvests on the open market. Furthermore, the government developed four special economic zones along the coast to attract international investment, increase exports, and import high-tech products into China. Additional reforms, implemented in stages, aimed to decentralize economic policymaking in a number of areas, including trade. Provincial and municipal governments were given economic control of diverse firms, and they were generally allowed to operate and compete on free market principles rather than under the direction and guidance of state planning. Citizens were also encouraged to create their own enterprises. Additional coastal regions and cities were classified as open cities and development zones, which allowed them to experiment with free-market reforms and to give tax and trade advantages to attract international investment. Furthermore, state pricing controls on a variety of products were gradually phased off. China’s economic growth was also aided by trade liberalization. Trade obstacles were removed, allowing for more competitiveness and FDI inflows. China’s incremental economic reforms aimed to determine which policies had positive economic effects (and which did not) so that they might be replicated across the country, a process Deng Xiaoping famously referred to as “crossing the river by touching the stones.” 9
China’s Economic Growth and Reforms: 1979-the Present
China’s economy has developed significantly quicker since economic reforms were implemented, and the country has avoided serious economic upheavals for the most part. 10 China’s annual real GDP averaged 9.5 percent from 1979 to 2018. (see Figure 3). As a result, China’s economy has been able to double in size in real terms every eight years on average. The worldwide economic slowdown that began in 2008 had a major influence on China’s economy. Early in 2009, Chinese media stated that 20 million migrant workers had returned home after losing their jobs due to the financial crisis, and that real GDP growth in the fourth quarter of 2008 had slowed to 6.8% year-on-year. The Chinese government responded by enacting a $586 billion stimulus program geared primarily at supporting infrastructure and relaxing monetary policy to boost bank lending. 11 As a result of these efforts, China was able to mitigate the consequences of a dramatic drop in worldwide demand for Chinese goods. China’s real GDP growth averaged 9.7% from 2008 to 2010. However, throughout the next six years, the rate of GDP growth fell, falling from 10.6 percent in 2010 to 6.7 percent in 2016. In 2017, real GDP increased to 6.8%, but fell to 6.6 percent in 2018. (although it rose to 6.8 percent in 2017). China’s real GDP growth will decelerate each year over the following six years, according to the IMF’s April 2019 World Economic Outlook, falling to 5.5 percent in 2024. (Figure 4). 12 Many analysts warn that if the US and China continue to apply punitive economic measures against each other, such as tariff rises resulting from US Section 301 action and Chinese retaliation, China’s economic development may decelerate even further. Increased tariffs on all trade between the US and China, according to the Organization for Economic Cooperation and Development (OECD), could cut China’s real GDP by 1.1 percent in 2021-2022, compared to the OECD’s baseline economic predictions. 13
Figure 4: China’s Real Annual GDP Growth from 2007 to 2018, with Forecasts through 2024
Causes of China’s Economic Growth
Much of China’s quick economic growth is attributed to two key factors: large-scale capital investment (funded by substantial domestic savings and foreign investment) and rapid productivity growth, according to economists. These two elements appear to have worked in concert. Economic changes strengthened the economy’s efficiency, resulting in more output and more resources for new investment.
China has a long history of having a high savings rate. Domestic savings as a percentage of GDP was at 32 percent when reforms began in 1979. During this time, however, the majority of Chinese savings were generated through SOE earnings, which were utilised by the central government for domestic investment. Economic reforms, which included decentralization of economic output, resulted in significant increases in both family and business savings in China. As a result, China has the largest gross savings as a proportion of GDP among major economies. China has been able to support a high level of investment due to its substantial domestic savings. In fact, China’s gross domestic savings greatly outnumber its domestic investment, making it a significant net worldwide lender.
Productivity gains (i.e., advances in efficiency) have been identified as another important element in China’s rapid economic growth by a number of experts. Productivity gains were mostly due to a reallocation of resources to more productive uses, particularly in industries like agriculture, trade, and services that were formerly tightly regulated by the government. Agricultural reforms, for example, increased output, allowing employees to pursue jobs in the more productive manufacturing sector. Non-state companies (such as private corporations) arose as a result of China’s economic decentralization, which tended to pursue more productive activities than centrally controlled SOEs and were more market-oriented and efficient. Furthermore, a larger portion of the economy (mostly the export sector) was subjected to competitive dynamics. Local and provincial governments were given unrestricted authority to form and operate businesses without intervention from the federal government. FDI also introduced new technology and procedures to China, which increased efficiency.
However, as China’s technological development converges with that of major developed countries (i.e., through the adoption of foreign technology), productivity gains and, as a result, real GDP growth may slow significantly, unless China becomes a major center for new technology and innovation and/or implements new comprehensive economic reforms. Several developing economies (most notably in Asia and Latin America) experienced rapid economic development and growth in the 1960s and 1970s by implementing some of the same policies that China has used to develop its economy to date, such as measures to boost exports and promote and protect specific industries. However, at some point throughout their development, some of these countries began to face protracted economic stagnation (or substantially slower growth than prior levels), a situation known as the “middle-income trap” by economists. 14 This means that while several developing (low-income) economies were able to transition to a middle-income economy, they were unable to transition to a high-income economy due to their inability to sustain high levels of productivity gains (in part due to their inability to address structural inefficiencies in the economy). 15 China may be at a comparable fork in the road right now. The World Bank uses a per capita gross national income (GNI) approach to classify economic development levels. 16 According to the World Bank, China transitioned from a low-income to a low-middle-income economy in 1997, and then to an upper-middle-income country in 2010. China’s per capita GNI in 2017 was $8,690, which was 38.7% below the amount required to become a high-income economy. According to the Chinese government, China will be able to cross the high-income level by 2025. It intends to accomplish this, in part, by making innovation a key source of future economic growth. Skeptics argue that China’s innovative development will be difficult to achieve, particularly if it is primarily state-driven and imposes new limitations on foreign companies.
Notes: The red bar represents the level at which China would need to achieve in order to become a high-income economy.
According to the Economist Intelligence Unit (EIU), China’s real GDP growth will drop significantly over the next several decades, eventually catching up to US growth rates by 2037. (U.S. and Chinese real GDP growth rates are both projected at 1.9 percent ). For a few years after that, the EIU expects US GDP growth to outpace China’s (Figure 6). 17
Figure 6: Annual Real GDP Growth Rates in the United States and China from 2010 to 2018 and Projections to 2050
The Chinese government has expressed a desire to shift away from its existing economic model of “rapid growth at any cost” to more “smart” growth, which aims to minimize reliance on energy-intensive and high-polluting industries in favor of high technology, renewable energy, and services. China has also stated that it wishes to achieve more balanced economic growth. (These topics are covered in greater depth later in the report.)
Is China’s GDP increasing or decreasing?
During a media call last week, Christine Peng, head of the Greater China consumer sector at UBS, claimed that business employees’ earnings increased in general between 2020 and 2021, notably in labor-intensive industries like catering and manufacturing.
However, she pointed out that increased uncertainty has caused customers to postpone purchases of discretionary items like new air conditioners. Consumers were also looking longer term, according to Peng, and female consumers were more inclined to acquire insurance or other financial management goods within their households.
Autos had the biggest loss in December’s retail sales figures, falling 7.4% year over year, followed by a 6% drop in home appliances and a 3.1 percent drop in furnishings. Daily needs experienced the biggest jump in sales last month, rising 18.8% from a year ago.
In a statement, Bruce Pang, head of macro and strategy research at China Renaissance, stated, “The pandemic could continue to be a drag on the rebound of consumer spending – while the situation in China is comparatively under control… compared to other large economies.” In the first quarter, he anticipates consumption to stay under pressure.
“We believe China has the opportunity to relax COVID limits, which might improve demand and market confidence; however, we believe it is highly unlikely that it will do so before the Beijing Winter Olympics and the Two Sessions.”
China’s GDP increased by 2.2 percent in 2020 compared to the previous year. According to the most recent statistics from the National Bureau of Statistics, which announced an annual data correction in December that cut 2020 GDP growth by 0.1 percentage point.
The most significant downward revisions were seen in real estate, transportation industries, and lodging and restaurants as compared to the first publication in 2021. The most significant increases were in renting, leasing activities, and business services, followed by manufacturing.
This story has been updated to reflect that Goldman Sachs has altered its GDP prediction for China for 2022. The year was incorrect in an earlier version.
In 2021, which country will have the greatest GDP?
What are the world’s largest economies? According to the International Monetary Fund, the following countries have the greatest nominal GDP in the world:
What will the US GDP be in 2021?
Retail and wholesale trade industries led the increase in private inventory investment. The largest contributor to retail was inventory investment by automobile dealers. Increases in both products and services contributed to the increase in exports. Consumer products, industrial supplies and materials, and foods, feeds, and beverages were the biggest contributions to the growth in goods exports. Travel was the driving force behind the increase in service exports. The rise in PCE was mostly due to an increase in services, with health care, recreation, and transportation accounting for the majority of the increase. The increase in nonresidential fixed investment was mostly due to a rise in intellectual property items, which was partially offset by a drop in structures.
The reduction in federal spending was mostly due to lower defense spending on intermediate goods and services. State and local government spending fell as a result of lower consumption (driven by state and local government employee remuneration, particularly education) and gross investment (led by new educational structures). The rise in imports was mostly due to a rise in goods (led by non-food and non-automotive consumer goods, as well as capital goods).
After gaining 2.3 percent in the third quarter, real GDP increased by 6.9% in the fourth quarter. The fourth-quarter increase in real GDP was primarily due to an increase in exports, as well as increases in private inventory investment and PCE, as well as smaller decreases in residential fixed investment and federal government spending, which were partially offset by a decrease in state and local government spending. Imports have increased.
In the fourth quarter, current dollar GDP climbed 14.3% on an annual basis, or $790.1 billion, to $23.99 trillion. GDP climbed by 8.4%, or $461.3 billion, in the third quarter (table 1 and table 3).
In the fourth quarter, the price index for gross domestic purchases climbed 6.9%, compared to 5.6 percent in the third quarter (table 4). The PCE price index climbed by 6.5 percent, compared to a 5.3 percent gain in the previous quarter. The PCE price index grew 4.9 percent excluding food and energy expenses, compared to 4.6 percent overall.
Personal Income
In the fourth quarter, current-dollar personal income climbed by $106.3 billion, compared to $127.9 billion in the third quarter. Increases in compensation (driven by private earnings and salaries), personal income receipts on assets, and rental income partially offset a decline in personal current transfer receipts (particularly, government social assistance) (table 8). Following the end of pandemic-related unemployment programs, the fall in government social benefits was more than offset by a decrease in unemployment insurance.
In the fourth quarter, disposable personal income grew $14.1 billion, or 0.3 percent, compared to $36.7 billion, or 0.8 percent, in the third quarter. Real disposable personal income fell 5.8%, compared to a 4.3 percent drop in the previous quarter.
In the fourth quarter, personal savings totaled $1.34 trillion, compared to $1.72 trillion in the third quarter. In the fourth quarter, the personal saving rate (savings as a percentage of disposable personal income) was 7.4 percent, down from 9.5 percent in the third quarter.
In 2021, real GDP climbed 5.7 percent (from the 2020 annual level to the 2021 annual level), compared to a 3.4 percent fall in 2020. (table 1). In 2021, all major subcomponents of real GDP increased, led by PCE, nonresidential fixed investment, exports, residential fixed investment, and private inventory investment. Imports have risen (table 2).
In 2021, current-dollar GDP expanded by 10.0 percent, or $2.10 trillion, to $22.99 trillion, compared to 2.2 percent, or $478.9 billion, in 2020. (tables 1 and 3).
In 2021, the price index for gross domestic purchases climbed by 3.9 percent, compared to 1.2 percent in 2020. (table 4). Similarly, the PCE price index grew 3.9 percent, compared to 1.2 percent in the previous quarter. The PCE price index climbed 3.3 percent excluding food and energy expenses, compared to 1.4 percent overall.
Real GDP rose 5.5 percent from the fourth quarter of 2020 to the fourth quarter of 2021 (table 6), compared to a 2.3 percent fall from the fourth quarter of 2019 to the fourth quarter of 2020.
From the fourth quarter of 2020 to the fourth quarter of 2021, the price index for gross domestic purchases grew 5.5 percent, compared to 1.4 percent from the fourth quarter of 2019 to the fourth quarter of 2020. The PCE price index climbed by 5.5 percent, compared to 1.2 percent for the year. The PCE price index increased 4.6 percent excluding food and energy, compared to 1.4 percent overall.
Source Data for the Advance Estimate
A Technical Note that is issued with the news release on BEA’s website contains information on the source data and major assumptions utilized in the advance estimate. Each version comes with a thorough “Key Source Data and Assumptions” file. Refer to the “Additional Details” section below for information on GDP updates.
Is China considered developed?
China’s designation as a ‘developing country’ at the World Trade Organization (WTO) has become a sensitive topic, with a number of countries concerned that the upper middle-income country is benefiting from WTO principles that are intended for impoverished countries. Concerns have also been raised about Bangladesh’s ‘least developed nation’ (LDC) status, which it may lose after surpassing India in terms of GDP per capita.