Dividends and China tops economic expectations on solid growth

If you were to think back on 2020 and ask yourself do you think China would show economic growth, given former President Trump has imposed tariffs and was recommending US companies doing business in China do it the US first? Likely you would tend to think China would have limited growth because some of the world’s largest multinational companies are based in the US and China plays a large role in their strategic plans.

In an article by Gabriel Crossley and Kevin Yao of Reuters, China is the world’s second largest economy after the US, released official data which should growth beating expectations. The Gross Domestic Product (GDP) grew at 2.3%, even accounting for the response to the global pandemic. China is expected to have the highest growth in 2021 at 8.4% according to a Reuters poll of leading economists.

Beijing’s or the ability of the government to apply strict virus curbs allowed China to contain the outbreak better than most countries around the world, while the government led stimulus plus encouraging manufacturers to step up production to supply goods which could not do so while they other countries shut down their economies.

GDP expanded 6.5% in the 4th quarter according to data from the National Bureau of Statistics. The statistics indicate China’s consumption lagged expectations, but exports grew more than expected.

Retail sales fell by 3.9%, but industrial output grew by 7.3%.

China is on its 14th 5 year plan, but it does have concerns. In all likelihood tensions between Washington and Beijing will ease, there are rising labor costs, an aging population, and much debt.

The Chinese central bank is expected to keep interest rates low for the coming months.

Linking to dividend paying stocks, most companies with overseas operations depend on China for revenues and logistics or the supply system. China may be a country some Americans do not like but it is an economic powerhouse not to be taken lightly. As China continues to grow commodity prices will hold up in value and there will be many stable prices on the stock market. China is not the most important aspect of a companies business, but it is one to pay attention to.

There are more questions than answers, till the next time – to raising questions.

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