China’s 2022 Economic Growth Slows Due to Coronavirus Restrictions

• Beijing abruptly changed its tight zero-Covid stance last month.
• The world’s second-largest economy’s GDP increased by 3% in 2022.
• Although far lower than the government’s 5.5% target.

The second-slowest rate of economic growth in China’s history was recorded last year, a sign of the negative impact the nation’s stringent coronavirus laws have had on the country’s commercial sector.

According to official data, the world’s second-largest economy’s gross domestic product (GDP) increased by 3% in 2022.

Although far lower than the government’s 5.5% target, this is better than most economists had anticipated.

Beijing abruptly changed its tight zero-Covid stance last month.

The policy had a significant influence on the economy of the nation last year, but the unexpected easing of the regulations has caused a sharp increase in Covid cases, which threatens to also hinder growth in the early months of this year.

Last year’s economic growth was the weakest since 1976, when Chairman Mao Zedong, the founder of the People’s Republic of China, passed away, with the exception of the beginning of the pandemic in 2020, when full-year GDP increased by 2.2%.

“The data exceeded our expectations in strength. However, it highlights how the Chinese economy will be severely impacted by a zero-Covid policy and a property crash in 2022 “According to Jacqueline Rong, a BNP Paribas bank deputy economist for China, she revealed.

Experts have expressed caution regarding China’s economic data, with some stating that it is more appropriate to look at the trajectory of the data than the actual numbers to determine how the economy of the nation is doing.

Along with the GDP figures, other Chinese economic data for December, including retail sales and factory output, also exceeded estimates but lagged behind pre-pandemic levels.

In recent months, economists have expressed concern about the status of the world economy and have pointed to a number of problems that have an effect on growth.

The World Bank stated last week that the world economy is “perilously close to entering a recession.”

According to the organization’s most recent forecast, a variety of elements related to Russia’s invasion of Ukraine and the pandemic’s effects were to blame.

It said that the three regions with the greatest influence on global economic growth—the US, the eurozone, and China—were “all facing a period of significant weakness,” a slump that was escalating the issues

GDP is a way to gauge all of a nation’s activity, including that of its businesses, citizens, and the government.

Businesses can use it to determine when to grow and recruit more staff, and governments can use it to determine how much to tax and spend.

The National Bureau of Statistics of China said on Monday that the price of new dwellings fell for the fifth consecutive month in December.

Prices in the final month of 2022 decreased by 0.2% from a month earlier as demand was hampered by nationwide Covid-19 outbreaks.

The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, encouraged Beijing to keep its economy open last week.

The most crucial thing is for China to continue on its current trajectory and not back away from that reopening.

“If they stay the course, by mid-year or there around, China will turn into a positive contributor to average global growth,” she added.

Since its reopening, Yating Xu, lead economist at S&P Global Market Intelligence, told that she has noticed indications of a slow rebound in Chinese consumer activity.

“The chance of a pandemic-policy turnaround is reduced by the government’s strengthening pro-growth posture and the economic recovery approaching 2023,” she said.

However, she continued, “the full reopening of mainland China’s borders is likely to be delayed until international travel bans on people from China are lifted.”

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