Year in Review: China’s Economic Recovery Hits Road Bump in 2021 Amid Policy Tightening

China’s economy has had a bumpy recovery from the Covid-19 pandemic in 2021. As GDP grew quickly in the first half of the year, due mainly to a low baseline and exceptional exports, economic activity slowed in the second half amid disruptions to both supply and demand.

As it stuck to its zero-infection policy, China kept new Covid-19 cases to a relatively low level, so manufacturers were able to smoothly deliver overseas orders amid strong global demand. But strict measures subdued domestic consumer spending, especially in the services sector. Meanwhile, rapidly increasing factory-gate inflation had an impact on some businesses’ profits.