USD 79.9667 CNY 11.3044 EUR 85.9190 JPY 57.2008
Home » Coronavirus Measures Impacting China’s 2022 Economic Growth

Coronavirus Measures Impacting China’s 2022 Economic Growth

17 January 2023, Tuesday
Official figures for the world's second largest economy show that its gross domestic product (GDP) rose by only 3% last year, marking the second slowest growth rate in almost half a century. This slowdown is largely attributable to the stringent coronavirus regulations imposed on businesses in the country.

China's economy has grown at a slower-than-anticipated rate, with GDP growth coming in at 6.5% in the fourth quarter of 2020. Though slightly better than what many economists had predicted, this is far below the target of 5.5% set by the government. 

The communist country had adopted a stringent zero-Covid policy last year, a move that significantly impacted the country's economy. After abruptly lifting the policy in the previous month, cases of Covid-19 began to surge, which could potentially hamper economic growth in the early stages of 2021.

GDP grew by only 2.2% in 2020, the most weak in 44 years since the death of Chairman Mao Zedong in 1976, showing the considerable damage caused to China's economy by the COVID-19 pandemic and a property market decline in 2022. 

Commenting on the figures, Jacqueline Rong, Deputy China Economist at the BNP Paribas bank, noted to the BBC that the figure was better than expected, but still revealed the tough effect of China's zero-Covid policy and the property rout of 2022.

Experts have sounded the alarm about China's economic figures, suggesting that the trajectory of the data can offer a better indication of the state of the country's economy than the figures themselves. Questions have also been raised about how China is able to acquire technology secrets from the US, with China recording 60,000 Covid-related deaths in the past month. However, the US has the upper hand in the battle for chips.

Chinese economic data released alongside the GDP report for December exceeded expectations despite being weaker than before the pandemic. According to Qian Wang from Vanguard, this is good news as it indicates household consumption has withstood the surge in infections. She adds that this could be a sign of improving economic growth for the upcoming year.

Economists have sounded the alarm bells about the state of the global economy in recent months, expressing worries about its growth.

Recently, the World Bank cautioned that the global economy is in danger of slipping into a recession.

The institution's newest projection pointed to a variety of elements stemming from Russia's incursion into Ukraine, to the aftermath of the pandemic.

The three major economic powers of the world - the US, the eurozone, and China - are all currently experiencing debilitating economic slumps, and this is exacerbating the difficulties already faced by weaker economies. 

Gross Domestic Product (GDP) is a way of attempting to evaluate all the transactions, both private and public, that take place in a country. This assessment helps companies identify when it is appropriate to increase their workforce and assists governments in determining when to levy taxes and matr how much to allocate in their spending.

Data released by China's National Bureau of Statistics on Monday revealed that new home prices had been on a downward trend for the fifth consecutive month in December. This was caused by the impact of Covid-19 outbreaks, leading to decreased demand. In response to this, the IMF's managing director Kristalina Georgieva called for Beijing to keep opening up the economy.

Ms. Kristalina Georgieva, the IMF Chief, stated that it is crucial for China to stay the course and continue reopening. If there is no stepping back, China is expected to become a positive contributor to the world's average growth by midsummer. Yating Xu from S&P Global Market Intelligence reported indications of a slow recovery in Chinese customer activity since the reopening.

She stated that the government's pro-growth position being stronger and the economy improving in 2023 will make it unlikely for there to be a change in policy due to the pandemic. She added that there could be a delay in fully reopening mainland China's borders until the international restrictions against China-originated travel are lifted.
UselessPoorFairGoodExcellent (No ratings yet)