Chinese economy grew 3% in 2022, according to official data

The economy of China It grew 3% in 2022, one of the lowest levels in the last 40 years, due to the coronavirus pandemic. COVID-19 and the crisis in the real estate sector, according to official figures released on Tuesday.

Beijing had set a goal of 5.5% expansion for last year, lower than the level of 2021, when the Asian giant’s GDP grew more than 8%.

The rigid adherence to the zero COVID strategy isolated China and hit economic activity, rattling supply chains with repercussions for the world economy.

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In the fourth quarter, the Chinese economy grew 2.9% year-on-year, down from 3.9% a year earlier, the National Statistical Office (NSO) reported.

The world’s second largest economy faced great difficulties at the end of 2022, when exports fell in December due to a drop in global demand and harsh sanitary restrictions.

Tuesday’s figures are the worst since a 1.6% contraction in 1976, the year of Mao Zedong’s death, and excluding 2020, after the coronavirus emerged in the city of Wuhan in late 2019.

ONE’s Kang Yi told reporters that China last year “it faced storms and troubled waters in the international environment”.

However, GDP growth exceeded the 2.7% anticipated on average by analysts consulted by AFP.

The fourth quarter data also exceeded forecasts, giving some optimism for 2023.

According to the ONE, Chinese industrial production grew 1.3% in December, compared to the previous year, while retail sales declined 1.8%.

Investment in fixed assets rose 5.1% last year and the urban unemployment rate fell to 5.5% in December, from 5.7% in November.

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“The good news is that there are now signs of stabilization, as the policy support adopted towards the end of 2022 is evidenced by the relative resilience of infrastructure investment and credit growth,” Louise Loo, an economist at Oxford Economics, said in a note.

End of zero COVID-19

China’s economic difficulties last year had an impact on the global supply chain, already affected by the decline in demand.

Mandatory COVID-19 lockdowns, quarantines and mass testing have shut down factories and businesses in big cities like Zhengzhou, home to the world’s largest iPhone factory.

But Beijing abruptly lifted the restrictions in early December, following a series of protests across the country.

The World Bank projected that Chinese GDP will recover to 4.3% in 2023, which is below expectations.

Meanwhile, the country is facing an uptick in COVID-19 infections that have overwhelmed its hospitals and health personnel.

Likewise, problems in the real estate sector affected growth.

This sector, which together with construction represents more than a quarter of China’s GDP, has suffered since 2020, when China began to control its excessive indebtedness and speculation.

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That regulatory tightening marked the beginning of financial worries for Evergrande, a former Chinese real estate leader now strangled by massive debt.

Property sales have fallen in several cities and many developers are struggling to make ends meet.

But the government seems to have taken a more conciliatory tone to revive this sector, with measures announced in November to promote its development. “stable and healthy”.

Such measures include credit support for indebted businesses and loan assistance for homebuyers.

Jing Liu, an economist at HSBC, anticipated that “the road to normalization could be bumpy, and warned of a “big setback in the short term” followed by a strong rally.

“The adoption of a series of measures to ensure sufficient financing for construction companies and revive housing demand will help stabilize the real estate sector”he predicted.

In turn, Chaoping Zhu, from JP Morgan Asset Management, noted in a note that “Looking ahead, we expect to see a sustained economic recovery in 2023 as a result of the reopening and stimulus policies.”

Source: AFP