China’s economic growth falls to 3%, gradually reviving

Jan 16, 2023, 4:16 AM | Updated: Jan 17, 2023, 1:34 am
A boy wearing a face mask using an iPhone with a Chinese currency note takes a picture on a street ...

A boy wearing a face mask using an iPhone with a Chinese currency note takes a picture on a street in Beijing, Tuesday, Jan. 17, 2023. China's economic growth fell to its second-lowest level in at least four decades last year under pressure from anti-virus controls and a real estate slump, but activity is reviving after restrictions that kept millions of people at home and sparked protests were lifted. (AP Photo/Andy Wong)

(AP Photo/Andy Wong)

BEIJING (AP) — China’s economic growth fell to its second-lowest level in at least four decades last year under pressure from anti-virus controls and a real estate slump, but activity is reviving after restrictions that kept millions of people at home and sparked protests were lifted.

The world’s No. 2 economy grew by 3% in 2022, less than half of the previous year’s 8.1% rate, official data showed Tuesday. That was the second-lowest annual rate since at least the 1970s after 2020, when growth fell to 2.4% at the start of the coronavirus pandemic.

China’s slump has hurt its trading partners by reducing demand for oil, food, consumer goods and other imports. A rebound would be a boost to global suppliers who face a growing risk of recession in Western economies.

Economic growth sank to 2.9% over a year earlier in the three months ending in December from the previous quarter’s 3.9%, the National Bureau of Statistics reported.

Consumer spending started to recover but still was weak in December after the ruling Communist Party abruptly ended its “zero-COVID” controls.

“The outlook for GDP growth in 2023 has improved,” said Iris Pang of ING in a report.

To shore up the economy, the ruling party also has backtracked on key financial and industrial policies, winding down anti-monopoly and data crackdowns aimed at tightening control over China’s tech industries. That campaign wiped hundreds of billions of dollars off the share prices of e-commerce giant Alibaba and other companies on foreign stock exchanges.

The government is loosening controls on real estate financing after tighter controls on debt that Chinese leaders worry is dangerously high caused economic growth to slide starting in 2021.

Asian stock markets were mixed after the news. Market benchmarks in China and Hong Kong declined while Tokyo gained. South Korea and Australia fell.

China’s economic growth is in long-term decline after hitting a peak of 14.2% in 2007, hampered by hurdles including an aging, shrinking workforce and growing curbs on Chinese access to Western technology due to security concerns.

China’s population of working age people 16 to 59 has fallen by about 5% from its 2011 peak to 876.6 million last year, based on official data released Tuesday. The working-age group as a share of the population of 1.4 billion fell to 62% from 70% a decade ago.

The International Monetary Fund and private sector forecasters expect economic growth no higher than about 4% through the rest of the decade.

In December, retail sales fell 1.8% from a year earlier, but that was an improvement over the previous month’s 5.9% contraction. Wary consumers are returning only gradually to shopping malls and restaurants amid a surge in COVID-19 infections that has flooded hospitals with patients.

Investment in factories, real estate and other fixed assets in December rebounded to 0.5% growth over the previous month following November’s 0.5% contraction.

“The good news is that there are now signs of stabilization,” Louise Loo of Oxford Economics said in a report.

Growth is forecast to improve this year to a still-modest level of about 5%. Economists point to weakness in real estate, an important economic engine, and slowing exports.

Factory output in 2022 rose 3.6% over the previous year, suggesting activity tumbled after hitting 4.8% in the third quarter of the year as U.S. and European demand for Chinese goods weakened under pressure from interest rate hikes to cool record-setting inflation.

The surprise end of some of the world’s most pervasive anti-virus controls followed a promise by the Communist Party in November to reduce the cost and disruptions of “zero COVID.”

That policy aimed to isolate every sick person. It helped keep China’s infection numbers below those of most other countries. But it shut down Shanghai and other cities for up to two months in early 2020 to fight outbreaks, disrupting manufacturing and trade. Growth tumbled to a low point of 0.4% over a year earlier in April-June before rebounding to 3.9% in the following quarter.

A new infection wave that began in October prompted authorities to reimpose restrictions that closed factories and required millions of people to stay home. Public frustration boiled over into protests in Shanghai and other cities. Some protesters in Shanghai called for Chinese leader Xi Jinping to resign.

The ruling party has dropped quarantine, testing and other restrictions and eased controls that blocked most travel into and out of China. It has yet to say when large-scale tourism into the country will resume.

Even after those controls were relaxed, some factories and restaurants were forced to close for weeks at a time in December due to lack of employees who weren’t infected.

On Saturday, the Cabinet promised tax cuts, bank loans and other support for entrepreneurs to “promote stable growth.”

“Reopening should result in a burst of growth over the coming year,” Goldman Sachs economist Andrew Tilton said in a report. Goldman raised its outlook on this year’s expansion to 5.2% from 4.5%.

Others are more cautious. The World Bank this month cuts it 2023 growth outlook for China to 4.3% from a forecast in June of 5.2%. It cited uncertainty about COVID-19 and the weak real estate industry.

The debt crackdown forced smaller developers out of business in an industry that accounts for up to 25% of China’s economic activity. Some bigger competitors missed bond repayments. Sales plunged while jittery buyers waited for the status of developers to become clear.

Financial markets are waiting to see what happens to Evergrande Group, the global industry’s most indebted company, which is trying to restructure more than $300 billion owed to banks and bondholders.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Paul Njoroge, right, points to photos of his wife and three children that were killed in the 2019 c...
Associated Press

Boeing pleads not guilty in case over deadly Max crashes

FORT WORTH, Texas (AP) — Boeing pleaded not guilty Thursday to a charge that it misled regulators who approved its 737 Max, the plane that was involved in two crashes that killed 346 people. Family members of passengers who died gave emotional testimony, calling for criminal prosecution of top Boeing officials. The families are trying […]
21 hours ago
abortion Capital gains tax Olympia meeting legislature abortion...
Associated Press

Washington lawmakers hear testimony on 7 abortion bills

Abortion rights proposals have been front and center in Olympia, Washington, this week as state lawmakers heard hours of public testimony on seven proposals that would reinforce abortion access.
21 hours ago
Research and development engineer Ravneet Kailey performs an experiment to produce steel without us...
Associated Press

US company gets $120 million boost to make ‘green steel’

The manufacture of “green steel” moved one step closer to reality Friday as Massachusetts-based Boston Metal announced a $120 million investment from the world’s second-largest steelmaker, ArcelorMittal. Boston Metal will use the injection of funds to expand production at a pilot plant in Woburn, near Boston, and help launch commercial production in Brazil. The company […]
21 hours ago
Associated Press

Mexico finds 57 adolescent migrants crammed into truck

MEXICO CITY (AP) — Mexican immigration authorities said they found 57 Guatemalan adolescents packed into a trailer on a highway near the U.S. border Thursday. The National Immigration Institute said the 43 boys and 14 girls were crammed into the truck’s trailer, along with eight men and a woman and her daughter. All of the […]
21 hours ago
FILE - The sun dial near the Legislative Building is shown under cloudy skies, March 10, 2022, at t...
Gene Johnson, Associated Press

Justices weigh effort to balance Washington state’s tax code

SEATTLE (AP) — An effort to balance what is considered the nation’s most regressive state tax code came before the Washington Supreme Court on Thursday, with justices hearing arguments about whether they should overturn a prohibition on income taxes that dates to the 1930s. Washington is one of nine states without an income tax, and […]
21 hours ago
Passengers coming from China arrive at the Incheon International Airport in Incheon, South Korea, o...
Associated Press

South Korea extends restrictions on travelers from China

SEOUL, South Korea (AP) — South Korea says it will continue to restrict the entry of short-term travelers from China through the end of February over concerns that the spread of COVID-19 in that country may worsen following the Lunar New Year’s holidays. South Korea in early January stopped issuing most short-term visas at its […]
21 hours ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
China’s economic growth falls to 3%, gradually reviving