China’s Growth: Don’t Mistake the Cyclical for the Structural

China’s Growth: Don’t Mistake the Cyclical for the Structural

By the terrible standards of 2020, China's 2.3% growth stands out. That sets the country up well for a strong 2021, before some familiar challenges reassert themselves.

Official full-year figures released Monday confirmed that China's economy is firmly on the mend, having performed impressively in the worst year for the global economy in recent memory.

This is partly because China handled the pandemic well, after initial missteps. But it was also lucky, both with its business cycle and because its key export industry, electronics, happened to uniquely benefit from pandemic-related demand in rich countries.

Although it wasn't broadly appreciated at the time, China's economy was already perking up in late 2019 due to the reviving fortunes of two of its largest, most labor-intensive manufacturing sectors: electronics and automobiles. Electronics in particular were boosted first by rebounding global smartphone shipments and then supercharged by demand for stay-at-home goods.

Profits in electronics and autos logged their strongest performances last year since