Coronavirus restrictions in China hinder China 2022’s economic growth
China’s economy grew at its second-lowest rate in nearly 50 years last year, a sign that the country’s coronavirus regulations had a negative impact on businesses.
Official statistics show that gross domestic product (GDP), the second-largest economy, increased by 3% in 2022.
This is a lot lower than the government’s target at 5.5%, but it’s better than what most economists expected.
Beijing abruptly relaxed its zero-Covid policy last week.
While the policy had a huge impact on the country’s economy last year, the sudden relaxation has caused a spike in Covid cases which may also hamper growth in the first part of next year.
The only exception was at the start of 2020’s pandemic, when full year GDP grew by 2.2%. Last year’s economic growth was also the weakest since 1976 when Mao Zedong, the founder of People’s Republic of China, passed away.
“The data came in stronger that we expected. It reveals the economic damage to China from a zero-Covid and property rout in 2022,” Jacqueline Rong from the BNP Paribas bank said to the BBC.
Experts are cautious about China’s economic numbers. Some warn that the trajectory of data, rather than the figures, is a better indicator of how China’s economy is performing.
The release of other Chinese economic data, such as factory output and retail sales for December, was also in line with GDP data. However, they were still below expectations compared to pre-pandemic levels.
“This is good news for the economy. It almost feels as though household consumption has held up in spite of the spike in infections towards the end last year,” Qian Wang, an investment advisor at Vanguard, said.
She said, “We are going into 2023 with stronger momentum… This will pose a lot more upside to economic growth.”
In recent months, economists have raised concerns about the state of the world’s economy. They cited several factors that could impact growth.
The World Bank declared last week that the world’s economy is “thriving”.perilously close to falling into recession“.
The latest forecast by the organization blamed several factors, including Russia’s invasion in Ukraine and the effect of the pandemic.
It stated that the US and eurozone were experiencing a period “of pronounced weakness”, a downturn which was worsening problems in poorer countries.
GDP is a measure A measure of all activity by the government, companies and individuals within a country.
It assists businesses in deciding when to grow and hire more workers, and government officials in determining how much tax and spending to tax.
China’s National Bureau of Statistics published data on Monday that showed that new home prices fell for the fifth straight month.
The Covid-19 epidemics in the country caused a drop in prices of 0.2% in the last month of 2022, which led to a decrease in prices.
Kristalina Georgieva (IMF managing director) urged Beijing last week to keep its economy open.
Ms Georgieva stated that it was important for China to keep the course and not retreat from that reopening.
She said that if they keep their course, China will become a positive contributor for average global growth by mid-year.
Yating Xu, principal economist at S&P Global Market Intelligence, told the BBC that she has seen signs of a gradual recovery in Chinese consumer activity since its reopening.
She said that “the government’s growing pro-growth stance, and the economic recovery entering 2023 decreases the likelihood of an anti-pandemic-policy reversal.”
“However, the reopening full of China’s borders may be delayed until after international restrictions against China-originated travel “They are dropped,” she said.