China’s growth in 2022 will be the lowest in 40 years: analysts

Growth China’s economy in 2022 It is projected as the weakest in four decades, after the pandemic crisis and the real estate sector, analysts indicated before the GDP announcement next Tuesday.

Ten experts consulted by the AFP agency foresee a GDP expansion of 2.7% year-on-year on average in the world’s second largest economy, a sharp drop from 8% growth in 2021.

It could also be the lowest since the contraction of 1.6% in 1976, the year of Mao Zedong’s death, not counting 2020, after the covid-19 emergency.

Mandatory lockdowns, quarantines and mass testing led to the closure of factories and businesses in big cities like Zhengzhou, home to the world’s largest iPhone factory, and reverberated throughout the global supply chain.

Beijing eased pandemic restrictions in early December, after three years of applying some of the world’s most written measures against the coronavirus.

As a consequence, China is facing a rebound in covid-19 infections that overwhelmed its hospitals.

China faces slow growth

The situation could be reflected in fourth quarter growth, which will also be announced on Tuesday along with other indicators, such as the Industrial production and the job.

“The fourth quarter is relatively difficult,” said economist Zhang Ming of the Chinese Academy of Social Sciences in Beijing.

“It doesn’t matter if it’s by consumption or investment metrics, growth is slowing down,” he added.

Chinese exports had their strongest drop since the start of the pandemic in December, with a contraction of 9.9% year-on-year, while consumption reached negative figures in November and investment slowed down.

“Those three carriages of the Chinese economy face relatively evident downward pressure in the fourth quarter,” Zhang said.

Teeuwe Mevissen, an analyst at Rabobank, noted that the fourth quarter “almost certainly will show a decline due to the rapid spread of the covid.”

“This will affect demand and supply conditions for the worse,” he said.

The problems of real estate they also affect growth, Mevissen said.

This sector, which together with construction represents more than a quarter of China’s GDP, has suffered since Beijing cracked down on excess credit and speculation in 2020.

This regulatory tightening marked the beginning of the financial concerns of Evergrandethe former Chinese real estate leader who is now carrying a huge debt.

Property sales have fallen in several cities and many developers are struggling to make ends meet.

However, the government appears to be taking a more conciliatory stance to revive this key sector.

Measures were announced in November to promote its “stable and healthy” development, with credit support for indebted developers and assistance for home buyers.

Some analysts view Chinese measures with optimism

“The transition phase could be difficult because the country may have to face a spike in infections that will put pressure on the health sector,” warned HSBC analyst Jing Liu.

The World Bank forecast that China’s GDP will grow at 4.3% in 2023, below expectations.

But economist Larry Yang stated that 2023 will be “the year of the return to certainty“.

He said he expects growth to accelerate quarter by quarter in 2023 to close at 5% expansion for the year. Other analysts consulted by AFP made the same projection.

“The worst period for the economy itself is over,” Yang said.