China’s economy slowed sharply in 2022, with the gross domestic product (GDP) growth registering its worst in nearly half a century, pressuring policymakers to provide more stimulus to boost the economy this year.
The National Bureau of Statistics said on Tuesday that China’s economy expanded by 2.9 per cent year over year in the fourth quarter, slowing from 3.9 per cent in the quarter before.
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On a quarterly sequential basis, China’s economy stagnated in the December quarter, highlighting the costs incurred by the stringent “zero-COVID” policy adopted.
For the full year, GDP growth was 3.0 per cent, significantly below the government’s target of “around” 5.5 per cent and a sharp slowdown from 2021’s 8.4 per cent growth.
While the reported rate was higher than the World Bank’s 2.7 per cent forecast made earlier this month by the World Bank, the 2022 figure marks China’s worst annual performance since 1976, excluding the 2.2 per cent growth that followed the initial Covid hit in 2020.
In 2020, major economies around the world slumped into a deep recession.
China’s “Zero-COVID policy” and a severe property market downturn last year hurt domestic economic activity and weighed on global supply chains already disrupted by the pandemic.
While Beijing abruptly lifted all those stringent pandemic restrictions in early December, it led to a surge in infections, which economists say would likely hamper growth in the near term.
But Redmond Wong, Greater China market strategist at Saxo Markets Hong Kong, told Reuters, “I think investors will look through the Q4 GDP prints and focus on 2023”.
“According to Chinese media, more than half of the 31 provinces and municipalities that have released 2023 work reports are targeting above 5.5 per cent growth for 2023,” added Wong.
There are questions about how the alarming mortality toll — officially at 60,000 in the past month or so — will affect broader consumer confidence. Supply chain disruptions caused by workers reporting sick may hinder the recovery and impact nations that depend heavily on Chinese imports.
With real estate prices still declining and expected to do so this year, the health of the massive property market debt-ridden property developers will pose another risk to economic recovery.
(With inputs from agencies)
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