TAIPEI. Lowest growth since 1976, excluding the first year of the pandemic. Population down for first time since 1961. Home investment down for first time since 1999. the three most relevant data that photograph China’s 2022, which not only slows down markedly on the economic front but also begins the dangerous trend reversal on the demographic one. Given this, which perhaps worries the government even more than the first in the medium to long term.
According to official data released this morning, Chinese GDP grew by 3% in the past year, significantly missing the target of “about 5.5%” indicated as each year during the “two sessions”, the legislative appointment of March. The pace of growth returns to the twilight levels of the Cultural Revolution era, given that with only 2.2% in 2020, it had worsened between now and 1976, the last year of Mao Zedong’s power and before the season of reform and opening launched by Deng Xiaoping. These figures are above the expectations of analysts, who believed growth would stop at around 2%, but they are still a setback.
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Above all, the meager +0.4% in the second quarter, the one characterized by the draconian lockdown in Shanghai, weighs heavily. The zero Covid strategy desired and above all maintained by Xi Jinping until the beginning of December had a decidedly negative impact on the Chinese economy. The sudden reopening following the protests at the end of November was not enough to ensure that the fourth quarter data (+2.9%) remained in line with the 3.9% of the third quarter, in any case far from the official targets. Both industrial production (+1.3% in December on an annual basis) and retail sales (-1.9% compared to December 2022) remain weak, demonstrating that the Chinese economic machine has not yet fully recovered after three years of closures and restrictions, as well as consumer confidence has not been reinvigorated.
The National Statistical Office has identified the «complicated and serious global situation» as the first reason for the slowdown in the economic recovery. But he admits the existence of a “triple internal pressure” between “demand contraction, supply shock and weakening expectations”. Elements that do not seem destined to disappear quickly in 2023, in which it is believed that growth is destined to accelerate (Nikkei expects +4.7%), but the foundations no longer appear as solid as they used to be. Just look at real estate investments, once the engine of Chinese growth and a key indicator: in 2022 they decreased by 10%. And this is the first drop since the surveys began in 1999. That’s not all. Home sales by area fell 24.3%, the highest number since data became available in 1992. New construction fell 39.4% and funds raised by Chinese real estate developers fell 25%. .9%. Merciless numbers, on which the government is trying to intervene by easing the tax tightening in 2020 and at least partially reneging on the so-called “three red lines policy” which was introduced to hit the risky debt investment system traditionally adopted by large private developers. A move that had exacerbated the difficulties of the giant Evergrande and many others.
But perhaps the most significant figure of those released by the Chinese authorities is what it indicates the first population decline since 1961. In 2022 the population of the People’s Republic shrunk between 850,000 and 1,400,000 units. A decline that was somewhat anticipated by the last census and which comes sooner than expected, given that until recently in Beijing it was believed that the demographic curve would not reverse before the second half of the decade. Here too, it seems difficult to reverse the trend. It was not enough to first cancel the one-child policy and then introduce the third-child policy. The economic trend, lifestyle changes and now the slowdown in growth are not helping the Party’s plans to support the birth rate. In the past twelve months, 9.56 million births were recorded against 10.41 million deaths. In the longer term, UN experts see China’s population shrinking by 109 million by 2050, more than triple the previous forecast in 2019. Already in 2023, India is expected to make the historic leap and become the most populous nation in the world .