The Chinese economy had one of its worst performances in decades last year as growth was dragged down by numerous Covid lockdowns followed by a deadly outbreak in December that swept across the country with remarkable speed.
China grew 3 per cent for the year, numbers released on Tuesday show, much less than in 2021 and short of Beijing’s target of 5.5 per cent. Other than 2020, it was the most disappointing showing since 1976, the year Mao Zedong died, when the economy declined by 1.6 per cent.
The government’s strict “zero Covid” restrictions cast a pall over 2022, strangling the economy with frequent quarantines, regional lockdowns and massive spending to pay for widespread testing.
Then on December 7, China lifted the policy without warning after nearly three years. Within weeks, the virus had infected hundreds of millions of people, killed many older residents and left factories, offices and restaurants bereft of workers and customers.
The policy reversal by Xi Jinping, China’s top leader, has sparked hope that the economy will regain its footing this spring.
Whether it does is of great significance to the world. China’s consumers are an almost irreplaceable source of revenue for homegrown and foreign companies. Its factories produce a greater share of the world’s manufacturing output than the United States, Germany and Japan combined.
The Chinese Communist Party has depended on growth for political legitimacy. Despite the blow inflicted by “zero Covid”, China appears to have grown faster last year than major rivals like the US, Japan and Germany, all of which are estimated by economists to have expanded less than 2 per cent last year. In the decade before the pandemic, China’s economy was one of the world’s most dynamic, growing an average of 7.7 per cent a year.
In the last three months of 2022growth sputtered to 2.9 percent according to the official data, a comedown from the previous quarter. Many economists cautioned that China might have exaggerated the level of activity in the last three months of the year.
Capital Economics, a London research firm, did its own calculation from detailed government statistics by industry and found growth added up to 0.5 per cent, not 2.9 per cent. Goldman Sachs economists expressed scepticism about the government’s numbers for December, which was much stronger than expected even though daily indicators like subway usage had previously shown that many Chinese stayed home last month as they fell sick or hid from the virus.
“It is very surprising in our view that the reported numbers for December were not worse, given the large Covid wave in the month,” Goldman said.
New York Times News Service
