China Q4 GDP Slows on COVID Woes, But Beats Expectations

The Chinese economy grew at a slower pace in the fourth quarter of 2022, data showed on Tuesday, as disruptions caused by the country’s now relaxed zero-COVID policy weighed heavily on business activity, although the reading still beat expectations. Chinese gross domestic product (GPD) grew at an annualized rate of 2.9% in the three months to December 31, data from the National Bureau of Statistics showed. The reading was higher than expectations for growth of 1.8%, and down from the third quarter’s reading of 3.9%. GDP was flat in the fourth quarter from the three months to September 31, ducking expectations for a 0.8% decline. This brought China’s overall GDP in 2022 to 3%, lower than the 4.4% growth estimated by President Xi Jinping during his New Year’s address. It was also down significantly from the 8.1% growth seen in 2021. China’s strict stance against COVID-19, which included strict quarantines and widespread curbs on movement and social activity, ground business activity to a halt in 2022. An indicator of overall business activity showed a contraction for all three months during the fourth quarter, as a string of new COVID-19 outbreaks saw the reintroduction of curbs in several economic hubs.

china q4 gdp

But Slowing Economic Growth, Coupled With Increased Public Backlash.

against the COVID curbs, saw China begin relaxing its strict zero-COVID policy from December. China reopened its international borders earlier in January for the first time in three years, marking a clear pivot away from the zero-COVID policy. Early indicators of road and air transport show that local activity and movement among citizens has already recovered sharply. A decline in economic activity is now expected to have bottomed out during the quarter, with markets positioning for a strong recovery in the Chinese economy this year. But given that the country is also facing its worst yet outbreak of the virus, the timeline for a full economic recovery in the country remains uncertain. Still, Chinese stock markets have been on a tear since November, as traders bought into heavily-discounted stocks on the hope of an economic bounceback this year. The yuan also recovered sharply from a 14-year low hit during late-2022, and was trading at a near five-month high.

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