China’s economy will grow by just 3% in 2022, highlighting the enormous costs of the government’s longstanding zero Covid strategy before being abruptly abandoned last month.
The country’s gross domestic product figure has already fallen short of Beijing’s official growth target, which was at 5.5%, the lowest in decades. Except for 2020, when the pandemic began, growth was the weakest since 1976 when GDP expanded by 2.2% for the full year.
nevertheless chinese economy A recovery is expected this year as we reopen to the world, but Tuesday’s data highlighted the scale of the challenge facing President Xi Jinping after three years of growth subservient to a huge anti-pandemic policy machine. .
GDP in the fourth quarter was flat compared to the third quarter and increased 2.9% year-on-year. This beat his 1.6% increase, which was an analyst’s forecast.Late last year, the government previously tightened Covid-19 restrictions in response to outbreaks in multiple cities suddenly relieve themallowed the virus to wipe out entire populations unchecked for the first time.
Economists expect growth to pick up this year compared to 2022, but policymakers have warned against Covid, the property crisis that has pushed house prices down, exports sluggish as the global economy slows, and China’s slump. We face many challenges. First population decline in 60 years.
“The Chinese economy is at a pivotal moment, and the turmoil caused by the prolonged COVID-19 zero policy and its sudden reversal could restore growth, at least moderately by Chinese standards,” said Eswar Prasad, a China finance expert at Cornell University. high-performing,” he said. University. “Growth momentum coming out of this difficult period will depend on how much and what kind of stimulus the government puts in place to get the economy back on track.”
Asia-Pacific stocks fell on Tuesday after the data was released, with Hong Kong’s Hang Seng Index down 1% and China’s CSI 300 down 0.1%. South Korea’s Kospi fell 0.6% while Japan’s Topix rose 0.8%.
Various indicators in December beat expectations, but reflected underlying weakness as estimated Covid infections surged to hundreds of millions, straining hospitals and weighing on economic activity. was Retail sales fell 1.8% year-on-year, compared to his 5.9% decline in November, while industrial output rose his 1.3%.
The unemployment rate improved to 5.5% from 5.7% in November. Over the year, industrial production increased by 3.6%, fixed investment increased by 5.5% and retail sales decreased by 0.2%.
“Overall, positive results have been achieved in effectively coordinating Covid-19 prevention and control and economic and social development in 2022,” said Kang Yi, director general of the National Bureau of Statistics of China. Stated. However, he added that “the foundations for the economic recovery are not solid”, citing a “complex” international background and domestic pressures.
“The data so far echoes our long-standing view that the boost to China’s reopening was somewhat weak at first, with private consumption being the main lag in the early stages,” said Louise Lu, senior economist at Oxford Economics. I support the view,” he said.
In addition to abandoning zero Covid constraints, policymakers recently revealed Potential incentives for property developers To support a sector that has suffered a series of defaults in the last 18 months.
Property investment will fall 10% in 2022 as part of the property crisis, with home sales falling 24% in floor space and 27% in value.
Additional reporting by Tom Mitchell from Singapore, Andy Lin from Taipei and William Langley from Hong Kong