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COVID-19 is undoubtedly a ‘black swan’ and has significantly affected the global economy in 2020. As 2020 draws to a close, there are many ways to review China’s economic performance in the past year, but two ‘upside surprises’ provide an interesting angle: exports and foreign direct investment (FDI). Despite very strong global headwinds, both areas have shown positive growth this year, beating market expectations. Against this background, we expect China’s economic growth to continue to recover and to grow 8.8% in 2021. In particular, we believe there are 10 macro trends that companies should pay attention to for next year’s economic environment:

  1. Consumption and service sectors continue to improve and become the main driver for China’s economic recovery in 2021
  2. Growth of manufacturing investment further accelerates  
  3. Exports remain robust, with growth rate staying high in 1H and moderating in 2H
  4. Fiscal and monetary stimulus will be gradually dialled back, but the pace of policy adjustment should be watched closely
  5. China remains attractive to foreign investment; supply chain resilience becomes an important consideration 
  6. Foreign holdings of RMB financial assets rise further and RMB exchange rate is expected to stay relatively strong 
  7. The global economy continues to recover, but is still influenced by pandemic control and vaccine roll-outs 
  8. US-China trade frictions may ease temporarily with the new US administration 
  9. Asia Pacific economic integration will be further strengthened 
  10. Innovation, security and green development are expected to be the key policy focus