China’s growth in 2022 would be the lowest in 40 years

The economic growth of China in 2022 it is projected as the weakest in four decades, after the crisis of the pandemic and that of the real estate sector, analysts indicated before the announcement of the GDP scheduled for this Tuesday.

Ten experts consulted by the AFP agency forecast a GDP expansion of 2.7% year-on-year on average in the world’s second largest economy, a sharp drop from the 8% growth recorded in 2021.

It could also be the lowest since the contraction of 1.6% in 1976, the year of Mao Zedong’s death, not counting 2020, after the emergence of the virus. COVID-19 in the Chinese city of Wuhan at the end of 2019.

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The lockdowns, quarantines and mandatory mass testing led to the abrupt closure of factories and businesses in big cities like Zhengzhou, home to the world’s largest iPhone factory, and reverberated throughout the global supply chain.

Beijing eased pandemic restrictions in early December, after three years of applying some of the world’s most written measures against the coronavirus.

slow growth

As a consequence, China is facing a rebound in coronavirus infections. COVID-19 that overwhelmed their hospitals.

The situation could be reflected in fourth-quarter growth, which will also be announced on Tuesday along with other indicators such as industrial production and employment.

“The fourth quarter is relatively difficult,” said economist Zhang Ming of the Chinese Academy of Social Sciences in Beijing.

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“It doesn’t matter if it’s by consumption or investment metrics, growth is slowing down”he added.

Chinese exports had their strongest drop since the start of the pandemic in December, with a contraction of 9.9% year-on-year, while consumption reached negative figures in November and investment slowed down.

“Those three carriages of the Chinese economy face relatively evident downward pressure in the fourth quarter,” Zhang pointed out.

Teeuwe Mevissen, an analyst at Rabobank, noted that the fourth quarter “almost certainly will show a decline due to the rapid spread of COVID.”

“This will affect demand and supply conditions for the worse,” spointed out

Problems in the real estate sector are also affecting growth, Mevissen said.

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This sector, which together with construction represents more than a quarter of China’s GDP, has suffered since Beijing cracked down on excess credit and speculation in 2020.

This regulatory tightening marked the beginning of financial worries for Evergrande, the former Chinese real estate leader now saddled with massive debt.

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

However, the government appears to be taking a more conciliatory stance to revive this key sector.

Measures were announced in November to promote its “stable and healthy” development, with credit support for indebted developers and assistance for home buyers.

“The worst is over”

Some analysts view these measures with optimism.

“The transition phase could be difficult because the country could have to face a rebound in infections that will put pressure on the health sector,” warned HSBC analyst Jing Liu.

The World Bank forecast that China’s GDP will grow at 4.3% in 2023, below expectations.

But economist Larry Yang declared that 2023 will be “the year of the return to certainty.”

He said he expects growth to accelerate quarter by quarter in 2023 to close at 5% expansion for the year. Other analysts consulted by AFP made the same projection.

“The worst period for the economy itself is over,” Yang asserted.