The data confirms what many already suspected: China’s stringent zero-covid policies have wreaked havoc on the nation’s economy, leading to one of the worst years of economic growth on record.
Official data (link in Chinese) released by China’s National Bureau of Statistics today (Jan. 17) showed the country’s economy eking out 3% growth in its gross domestic product in 2022. That is far off the official target set earlier last year of “around 5.5%,” itself the least ambitious goal the country has had in three decades.
Excluding the 2.2% GDP growth in 2020 (revised down from the initial 2.3%), the first year of the coronavirus pandemic, last year was the worst since 1976, which saw a negative growth rate of -1.6% following the end of the decade-long Cultural Revolution launched by the late Chinese leader Mao Zedong in 1966 to purge society of perceived enemies of communism and to consolidate his grip on power.
On a quarterly basis, China recorded zero growth in the fourth quarter of 2022, down from 3.9% in the previous quarter. Another development that will weigh on future growth: China’s population shrank last year, the first contraction since the early 1960s.
Nevertheless, Chinese authorities tried to put a positive spin on the data, declaring that the national economy had “withstood pressure and risen to a new level.”
How much will China’s economy grow in 2023?
China began rapidly and chaotically dismantling its whole-of-society zero-covid complex last month, and it remains to be seen whether the country can achieve a sizeable economic rebound this year.
High rates of infection across the population have already overwhelmed hospitals. And even China’s dramatically revised covid death toll of 60,000 in just over a month is likely an undercount, considering researchers’ projections of nearly a million deaths under a scenario in which the country reopens without an aggressive campaign to ensure the population is sufficiently vaccinated against the virus.
Continued disruptions from high incidences of illness among workers could also hamper economic activity, even as pandemic restrictions have been rolled back.
Data from Everstream Analytics, a supply chain data and risk analytics provider, show significant increases in vessel waiting times at major ports. The is likely due to acute labor shortages caused by massive covid infection rates, according to the company. As of the week ending Jan. 8, for example, vessel waiting times at Ningbo port had more than tripled since the last week of November, from 10.5 hours to 31 hours.
Target GDP growth rates (link in Chinese) released by Chinese provinces today show a majority aiming for above 5%.
The International Monetary Fund is also bullish on China. Addressing the media last week, its managing director Kristalina Georgieva projected “very high growth” for China this year. Whether that materializes or not, she added, will likely be “the single most important factor for global growth in 2023.”