The pace of growth in the Chinese economy fell to the second lowest level in at least four decades last year, reflecting the impact of the ‘zero covid’ policy and a crisis in the real estate sector.
Data released today by the National Statistics Office (GNE) suggest, however, that economic activity is recovering, after Beijing put an end to epidemic prevention measures that resulted in the blockade of entire cities, culminating in large-scale protests. .
The world’s second-largest economy grew 3% in 2022, less than half the 8.1% growth rate achieved the previous year.
This is the lowest economic growth rate since at least the 1970s. In 2020, at the beginning of the covid-19 pandemic, the Asian country grew by 2.4%, due to the imposition of blockades in various parts of the country, after the virus was detected in the city of Wuhan, in the center of the country.
Consumption is recovering after the Chinese Communist Party (CCP) suddenly ended the ‘zero cases’ policy of covid-19 last December.
However, consumers remain cautious as China grapples with an unprecedented wave of cases that has caused a public health crisis in the country. Officials say the peak of this wave appears to have passed.
The slowdown of the Chinese economy has a strong impact on the raw materials market, affecting countries such as Angola or Brazil, by reducing demand for oil, iron ore and agricultural goods. The impact is also felt by the more developed economies, as China is one of the biggest markets in the world for automobiles and other value-added goods.
A recovery in the Chinese economy would provide a boost for global suppliers who face a growing risk of recession in Western economies.
The International Monetary Fund and private sector analysts expect growth to improve this year, to around 5%. These point to weakness in China’s real estate sector, a major economic engine, and falling exports as demand for Chinese goods in the United States and Europe slows after raising interest rates to combat high interest rates. inflation.
Retail sales were down 1.8% year-on-year in December, but this was an improvement from the 5.9% year-on-year contraction recorded in November.
Industrial production in 2022 increased by 3.6% year-on-year, suggesting that activity has fallen, after reaching 4.8% in the third quarter of the year, with demand in the US and Europe for Chinese products weakening.
To boost the economy, the CCP backtracked on some major financial and industrial policies.
Beijing ended a campaign launched against major technology groups, which resulted in sharp drops in the prices of companies, including e-commerce group Alibaba, computer games company Tencent or ride-sharing service Didi.
Beijing has also eased restrictions on access to credit by large real estate groups. A campaign to reduce the level of corporate debt caused a liquidity crisis in the sector, which is an important engine of economic growth in the country.
Last Saturday, the Chinese State Council promised to cut taxes, facilitate bank loans and offer other support to entrepreneurs, to “promote stable growth”.
“The reopening should result in an explosion of growth next year,” Andrew Tilton, an economist at investment bank Goldman Sachs, said in a report published on Friday.
The US bank raised the growth outlook for the Chinese economy this year from 4.5% to 5.2%.
The World Bank, however, reduced this month’s growth forecast to 4.3%, compared to the 5.2% forecast published last June.
