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China’s 2022 Economic Growth Seen as its Lowest in 40 Years

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China's 2022 Economic Growth Seen as its Lowest in 40 Years

(CTN News) – Following the twin crises of the pandemic and the housing crisis, economists predicted that China’s economic growth for 2022 would be among the worst in the last forty years.

The average GDP growth rate predicted by the ten experts consulted by AFP is 2.7 percent annually, a dramatic decline from China’s projected growth of more than 8 percent in 2021.

After the Covid-19 virus surfaced in Wuhan in late 2019, it may be China’s slowest rate since a 1.6 contraction in 1976, when Mao Zedong passed away, excluding 2020.

Beijing had set a growth goal of around 5.5 percent for 2022, but the government’s “zero-Covid” policy, which slowed down production and consumption, weakened this goal.

Strict lockdowns, quarantines, and mandatory mass testing led to the sudden shutdown of manufacturing plants and enterprises in significant hubs, such as Zhengzhou, which is home to the largest iPhone manufacturer in the world, and had an impact on the whole global supply chain.

After maintaining arguably of the strictest Covid regulations in the world for three years, Beijing dramatically lifted pandemic limits in early December.

The number of Covid cases in China is rising, overwhelming the country’s hospitals and medical personnel.

The fourth-quarter growth for 2022, which will also be released on Tuesday, along with many other measures, including retail, industrial output, and employment, is expected to reflect this.

According to economist Zhang Ming of the Chinese Academy of Social Sciences in Beijing, “the fourth quarter is pretty challenging.”

“The growth is declining regardless of whether it is measured by investment or consumption criteria.”

China’s exports fell 9.9 percent year-over-year in December, the sharpest drop since the epidemic began, while consumption fell in November and investment lagged.

Zhang said that in the fourth quarter, “the three horse carriages of the Chinese economy are all suffering a pretty visible downward pressure.”

Following the easing of health restrictions in December, Rabobank analyst Teeuwe Mevissen echoed Zhang, stating that the last quarter would “probably likely show a reduction due to the quick distribution of Covid.”

This would negatively impact the circumstances of supply and demand, he said.

Growth is still being hindered by issues in the real estate industry, according to Mevissen.

Since Beijing began to tighten down on excessive borrowing and unrestrained speculation in 2020, this industry, which along with construction, accounts for more than a quarter of China’s GDP, has been struggling.

China’s GDP is expected to rise to 4.3 percent in 2023

Evergrande, the previous Chinese market leader in real estate that is now choked by massive debt, began to experience financial concerns due to this regulatory tightening.

Since then, home sales have decreased in several areas, and many developers are now trying to make ends meet.

The administration, however, seems to be approaching the revival of this important industry in a more accommodative manner.

These actions were seen as a cause for hope by several observers.

According to HSBC analyst Jing Liu, who forecasted a downturn shortly, “the transitioning period will certainly be rocky as the government may need to deal with mounting cases and more stressed health services.”

But she said that “China’s reopening process has begun” after three years of health restrictions.

According to the World Bank, China’s GDP is expected to rise to 4.3 percent in 2023, which is still below projections.

Larry Yang, an economist, proclaimed 2023 as “the year of returning to certainty.”

In line with other economists questioned by AFP, he predicted that growth would pick up steam quarter by quarter in 2023, with a full-year GDP of 5%.

The hardest time for the economy has already passed, according to Yang.

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