China’s 2022 Economic Growth One of the Worst on Record, Post-Pandemic Policy Faces Test

Workers work at a construction site in Beijing on Jan. 12, 2023. Tingshu Wang/Reuters

BEIJING—China’s economic growth in 2022 slumped to one of its worst levels in nearly half a century as the fourth quarter was hit hard by strict COVID-19 curbs and a property market slump.

The quarterly growth and some of the December indicators such as retail sales beat market expectations, but analysts noted the overall economic impulse across China remained weak and highlighted the challenges facing Beijing after it abruptly lifted its “zero-COVID” policy last month.

Gross domestic product (GDP) grew 2.9 percent in October–December from a year earlier, data from the National Bureau of Statistics (NBS) showed on Jan. 17, slower than the third-quarter’s 3.9 percent pace. The rate still exceeded the second quarter’s 0.4 percent expansion and market expectations of a 1.8 percent gain.

“China’s 2023 will be bumpy; not only will it have to navigate the threat of new COVID-19 waves, but the country’s worsening residential property market and weak global demand for its exports will be significant brakes,” Harry Murphy Cruise, economist at Moody’s Analytics, said in a note.

For 2022, GDP expanded 3.0 percent, badly missing the official target of “around 5.5 percent” and braking sharply from 8.4 percent growth in 2021. Excluding the 2.2 percent expansion after the initial COVID-19 hit in 2020, it’s the worst showing since 1976—the final year of the decade-long Cultural Revolution that wrecked the economy.

“Activity data in December surprised broadly to the upside, but remains weak, particularly across demand-side segments such as retail spending,” Louise Loo, senior economist at Oxford Economics, said in a note.

Reopening Challenges

On a quarterly basis, GDP stalled, coming in at 0.0 percent in the fourth quarter, compared with growth of 3.9 percent in July–September, highlighting underlying weakness across many sectors.

Factory output grew 1.3 percent in December from a year earlier, slowing from a 2.2 percent rise in November, while retail sales, a key gauge of consumption, shrank 1.8 percent last month after November’s 5.9 percent drop.

Official data showed unemployment eased despite manufacturing and services activity getting squeezed by the spike in COVID-19 infections. The nationwide survey-based jobless rate dropped to 5.5 percent in December from 5.7 percent in November.

China’s property industry was among the biggest drags on growth. Investment in the sector fell 10.0 percent year-on-year in 2022, the first decline since records began in 1999, and property sales slumped the most since 1992, NBS data showed, suggesting that the Chinese regime’s support measures were having minimal impact so far.