China’s economy grew by just 3 percent in 2022, highlighting the high costs of the government’s long-term strategy to combat the coronavirus, before it was abruptly abandoned last month.
The country’s gross domestic product figures fell short of Beijing’s official growth target, which at 5.5 percent was the lowest in decades. Other than 2020 at the start of the pandemic, when full-year gross domestic product expanded by 2.2 percent, growth was the weakest since 1976.
Although the China’s economy Expected to recover this year as it reopens to the world, Tuesday’s data highlighted the scale of the challenge President Xi Jinping faces after growth has been subjected to a broad anti-pandemic policy apparatus for three years.
In the fourth quarter, gross domestic product was flat compared to the third quarter and rose 2.9 percent year-on-year, above analysts’ expectations for a 1.6 percent increase. Late last year, the government tightened Covid-19 restrictions in response to earlier outbreaks of the disease in urban areas Suddenly relievedallowing the virus to spread unimpeded through the population for the first time.
Economists expect growth to rebound this year compared to 2022, but policymakers face a host of challenges including Covid, the real estate crisis that has sent down home prices, and declining exports as the global economy and China slow. First population decline in 60 years.
“The Chinese economy is at a pivotal point, with the disruptions from the protracted zero-Covid policy and its sudden reversal likely giving way to a return to moderate growth at least by Chinese standards,” said Eswar Prasad, a China finance expert at Cornell University. University. “The growth momentum resulting from this challenging period will depend on the amount and type of stimulus the government uses to get the economy back on track.”
Stocks in the Asia-Pacific region fell on Tuesday after the data was released, with Hong Kong’s Hang Seng down 0.8 percent and China’s CSI 300 down 0.2 percent. The Kospi index in South Korea lost 0.3 percent, and the Japanese Topix index gained 0.8 percent in morning trading.
Various metrics beat forecasts in December but reflected underlying weaknesses as estimated Covid infections climbed into the hundreds of millions, straining hospitals and severely squeezing economic activity. Retail sales fell 1.8 percent year-on-year, compared to a 5.9 percent decline in November, while industrial production added 1.3 percent.
The unemployment rate improved to 5.5% from 5.7% in November. Over the full year, industrial output rose 3.6 percent, fixed-asset investment rose 5.5 percent, and retail sales fell 0.2 percent.
“Overall, positive results have been achieved in effective coordination of Covid-19 prevention and control, and economic and social development in 2022,” said Kang Yi, head of China’s National Bureau of Statistics. However, he added, “the foundation of the economic recovery is not solid,” citing a “complex” international background and domestic pressures.
“The data so far supports our long-held view that support for China’s reopening will be fairly weak initially, with consumer spending going to be a major slowdown in the initial stages,” said Louise Law, chief economist at Oxford Economics.
In addition to abandoning zero Covid restrictions, policymakers have recently revealed potential Motivate real estate developers To support a sector that has been hit by a wave of defaults over the past 18 months.
Real estate investment fell 10 percent in 2022 as part of the real estate crisis that has sent home sales down 24 percent in terms of floor area and 27 percent in dollar terms.
Additional reporting by Tom Mitchell in Singapore and Andy Lin in Taipei