China’s economy grew at second slowest rate in half a century in 2022

File. Residents carry bags as they visit the Wangfujing shopping street in Beijing, Monday, 14 November 2022 (Associated Press)
File. Residents carry bags as they visit the Wangfujing shopping street in Beijing, Monday, 14 November 2022 (Associated Press)

China’s GDP grew at its second slowest pace last year in almost half a century – a sign that experts believe illustrates the impact strict Covid restrictions had on businesses.

The Chinese government had targeted GDP growth of 5.5 per cent but official figures show that the gross domestic product increased three per cent in 2022.

The World Bank earlier this month predicted growth of just 2.7 per cent.

Last year’s economic growth – other than at the start of the pandemic in 2020 when full-year GDP expanded by 2.2 per cent – was the weakest since 1976.

“The data came in stronger than our expectation. Nevertheless, it reveals the hard hit to the Chinese economy from a zero-Covid policy and a property rout in 2022,” Jacqueline Rong, deputy China economist from the BNP Paribas bank told the BBC.

When the pandemic started, China implemented strict lockdowns and safety precautions with its zero-Covid policy. However, last month, it abandoned the policy with little warning and since then Covid cases seem to have multiplied in the country due to a lack of preparation.

But experts believe that the policy shift will likely help the economic growth in China in 2023 and beyond.

The World Bank forecasts GDP growth will quicken to 4.3 per cent this year and five per cent the next.

David Bassanese, chief economist for Betashares, told The Guardian that while official statistics always needed “to be taken with a grain of salt”, the GDP figures were “much better than feared in the final months of 2022”.

He said that retail spending and industrial production in China were also stronger than market expectations last month. “This suggests the economy may have already begun to benefit from the partial reduction in Covid restrictions last month and is well placed to rebound even more strongly in the first few months of this year.”

Last week, International Monetary Fund (IMF) managing director Kristalina Georgieva urged Beijing to continue reopening its economy. “What is most important is for China to stay the course, not to back off from that reopening. If they stay the course, by mid-year or there around, China will turn into a positive contributor to average global growth.”