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China: decline in growth in 2022, one of the weakest for 40 years

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China: decline in growth in 2022, one of the weakest for 40 years

China announced Tuesday, January 17 for 2022 an economic growth up 3%, one of the weakest rates for 40 years, due to health restrictions and the real estate crisis which penalized activity. Beijing had set itself a target of 5.5%, a rate already much lower than the performance of 2021 when the Asian giant’s GDP had increased by more than 8%. In the fourth quarter, Chinese growth slowed down (+3.9%), compared to 3.9% in the previous quarter, the National Bureau of Statistics (BNS) said on Tuesday.

Eminently political and subject to caution, the official figure for gross domestic product (GDP) is nonetheless closely scrutinized, given the country’s weight in the global economy. Last year, China’s growth was the weakest since the contraction of 1976 (-1.6%) and the slowdown of 2020, the first year of the pandemic (+2.3%). A group of economists polled by AFP anticipated a more pronounced slowdown (+2.7%).

The Asian giant’s economy has been heavily penalized by the strict so-called “zero Covid” health policy, which during most of 2022 was a brake on activity and consumption. This costly strategy, which relied on lockdowns and compulsory drug tests to access public places, led to frequent closures of factories and businesses, which weighed on travel and supply chains. Faced with the exasperation of the population, these measures were lifted in December. But activity is struggling to restart, due to an explosion in the number of Covid patients.


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Unemployment down

In December, retail sales, the main indicator of household spending, were down for the third consecutive month (-1.8% over one year), after a plunge in November (-5.9%). For its part, industrial production slowed last month (+1.3% over one year), after rising 2.2% in November. As for the unemployment rate, it fell slightly in December (5.5%), against 5.7% in November.

However, this figure paints an incomplete picture of the economic situation, since it is only calculated for urban dwellers. It effectively excludes the millions of migrant workers, who are particularly vulnerable to the economic downturn. Their situation has been exacerbated by a crisis in real estate, a sector which, along with construction, represents more than a quarter of China’s GDP and is a major pool of low-skilled jobs.

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