China’s 2022 economic growth one of the worst on record

Gross domestic product (GDP) grew 2.9pc in October-December from a year earlier, data from the National Bureau of Statistics (NBS) showed on Tuesday, slower than the third-quarter’s 3.9pc pace. The rate still exceeded the second quarter’s 0.4pc expansion and market expectations of a 1.8pc gain.

Beijing’s sudden relaxation of stringent anti-virus measures has boosted expectations of an economic revival this year, but it has also led to a sharp rise in Covid cases that economists say might hamper near term growth. A property slump and weak global demand also mean a rebound in growth will be heavily reliant on shell-shocked consumers.

“China’s 2023 will be bumpy; not only will it have to navigate the threat of new Covid-19 waves, but the country’s worsening residential property market and weak global demand for its exports will be significant brakes,” Harry Murphy Cruise, economist at Moody’s Analytics, said in a note.

For 2022, GDP expanded 3.0pc, badly missing the official target of “around 5.5pc” and braking sharply from 8.4pc growth in 2021. Excluding the 2.2pc expansion after the initial COVID hit in 2020, it’s the worst showing since 1976 – the final year of the decade-long Cultural Revolution that wrecked the economy.

“Activity data in December surprised broadly to the upside, but remains weak, particularly across demand-side segments such as retail spending,” Louise Loo, senior economist at Oxford Economics, said in a note.

The “data so far supports our long-held view that China’s reopening boost will be somewhat anaemic at the beginning, with consumer spending being a key laggard in the initial stages,” Loo said.

A Reuters poll forecast growth to rebound to 4.9pc in 2023, as Chinese leaders move to tackle some key drags on growth – the “zero-Covid” policy and a severe property sector downturn. Most economists expect growth to pick up from the second quarter.

A strong rebound in China could temper an expected global recession, but it could also cause more inflationary headaches worldwide just when policymakers are starting to get a handle on record price surges.

Adding to the challenges facing the economy and the government, China’s population in 2022 fell for the first time since 1961, the NBS data showed, a historic turn that is expected to mark the start of a long period of decline in its citizen numbers and see India become the world’s most populous nation in 2023.

“The population will likely trend down from here in the coming years. This is very important, with implications for potential growth and domestic demand,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

“Going forward, demographics will be a headwind. Economic growth will have to depend more on productivity growth, which is driven by government policies.”