EU Companies Should Get Ready for China in 2021
Having suffered through the worst of the outbreak in the first quarter of 2020, the zero-tolerance approach of the Chinese government with strict lockdowns and frequent testing is bearing fruit and has kept the virus under control. The impact of the first quarter was followed by an impressive revival. In the second quarter of 2020, China’s economy grew faster than in the same period a year before – by 3.3 percent – and by 4.9 percent in the third quarter.
Initially, it was mainly industrial production that boosted the economy and consumption lagged somewhat behind. But in the meantime Chinese consumers have found their way to the shops again. In October 2020, retail sales were 4.4 percent higher than a year before and car sales are already above 2019 levels. Industrial investments are also finally recovering and, together with the sharp increase in investments in real estate and infrastructure, they ensure a total investment growth of 12 percent in October. As a consequence, China is the only country in the G20 to see its economy expand in 2020. China's economy is on track for a 2% growth in 2020.
Analysts expect that China’s annual GDP growth will accelerate to 7-8 percent in 2021. This is good news from a European point of view too. EU companies can benefit from China’s fast recovery and should therefore prepare to return to China and reassess their China strategy. The COVID-19 crisis has created new opportunities and market openings in China, supported by policies and tax incentives by the Chinese government. Furthermore, infrastructure projects along the Belt and Road will be reaching completion in 2021, opening newer routes to facilitate regional investments and boost trade.
This is an abstract from an article written by Bart Horsten and published on the WeChat account of the Belgian-Chinese Chamber of Commerce on 17 December 2020.