Just before Chinese New Year on 22 January, the country makes up its accounts for the past year, and the numbers are not bright as the Chinese get seven public holidays to celebrate the transition from the year of the tiger to the year of the hare.
When the Year of the Tiger 2022 began, the authorities projected economic growth of about five percent. It certainly didn’t work out that way. But now China is entering the year of the hare, and perhaps things are going better for it than it did for the tiger.
Economic bang
In 2022, China’s economic growth was the lowest in nearly half a century. One of the reasons was the sudden turnaround from zero infection and strict measures against covid to the lifting of the measures. The real estate market also fell sharply.
China’s National Bureau of Statistics had a long list of woeful numbers to show when it came to its 2022 report. GDP increased by 3%, which is well below the official target of roughly 5.5% GDP growth.
THE HARE: This giant hare lamp lights up Nanjing, waiting for the year that begins on January 22. Photo: STR
According to Reuters, this is the second worst economic performance since 1976 – the last year of China’s 10-year Cultural Revolution, which devastated the economy. Only after the covid outbreak in 2020 was the Chinese economy hit harder.
Historic turn in housing and population
Investments in property fell 10% compared to last year. The authorities have introduced a number of measures aimed at home buyers and property developers in recent weeks. Developers have recently found themselves in a liquidity crisis, and at the moment the completion of a number of housing projects is greatly delayed.
FIREWORKS: For those who saw how many fireworks we sent off in the big cities in Norway on New Year’s Eve itself: These are the fireworks they send off from an amusement park to pre-celebrate the Chinese New Year. Taken on December 31, 2022 in Huaian, Jiangsu. Photo: AFP / NTB
At the same time, the population is falling for the first time since 1961. It is a historic turn, and according to Reuters, it is expected that the population will continue to fall. The country had 1.41175 billion people by the end of 2022, down from 1.41260 a year earlier, according to China’s National Bureau of Statistics.
The authorities are introducing measures against both housing and population decline. They are trying to entice more people to have children with tax reductions, longer maternity leave and subsidies for housing.
High expectations for the Year of the Rabbit
Nevertheless, experts believe there is light at the end of the tunnel for China. When the strict corona measures came to an abrupt end, sales and production rose. Although the numbers were weak, they exceeded expectations in the market.
– The economic activity in December surprised everyone with positive figures. A higher demand than expected was particularly surprising, says Loise Loo, senior economist at Oxford Economics to Reuters.
UP LIKE A TIGER: Down like a skink, one might say about the year that passed in the Chinese economy. Photo: AFP / NTB
Chief economist Hao Zhou also expects a steady improvement in consumption and investment after the reopening.
Reuters calculations indicate that China will have economic growth of 4.9 percent in 2023.
But the calculations last year, five percent economic growth, did not work out. The world is also in a situation where big politics can affect the economy in unexpected ways.
China can be a headache
If China comes back strongly, it could dampen the global recession expected in 2023. But on the other hand, it could become a headache for other countries trying to deal with rising prices and inflation. If China quickly returns to growth, it may present political challenges and competition to other economies that are trying to enter.
