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China prepares for disappointing data.

China data

 The Chinese economy narrowly avoided contraction in the second quarter, posting 0.4 per cent year-on-year growth, before expanding by 3.9 per cent in the third quarter, in a release that was delayed during the Communist party congress, where President Xi Jinping secured a third term in power. The fourth-quarter reading will also have been dragged down by widespread lockdowns in the October to December period, followed by the chaotic abandonment last month of Xi’s contentious zero-Covid policy, even as the virus raced across the country.

Some of China’s largest provinces are projecting growth of 5-6 per cent, and the government’s official growth target, traditionally announced at the annual session of the National People’s Congress in March, is likely to be 5 per cent or higher. «The exit from the zero-Covid policy has been much faster than expected,» said Larry Hu, chief China economist at Macquarie.

Year-on-year property sales have remained the same since the second quarter of 2021 and fell more than 50 per cent in the second quarter of last year. In recent weeks financial officials have quietly relaxed leverage restrictions introduced to reduce banks’ exposure to the sector. The rules ultimately pushed one of the country’s most prominent developers, China Evergrande, into default.

In US dollar terms, China’s exports fell 0.3 per cent year on year in October, the first such decline since the early stages of the pandemic in 2020.

China’s rapidly declining demographic profile is a longer-term threat to its economic prosperity. Its hopes of overtaking the US as the world’s largest economy, let alone becoming as wealthy per capita, will be dashed if this trend cannot be slowed. China recorded 10.6mn births and 10.1mn deaths in 2021, putting it on the cusp of its first year-on-year population decline since the Great Leap Forward famine. Initial estimates for China’s last 10-year census showed that the population had peaked in 2020, according to people involved in the process, but were ultimately revised upwards to show a slight population increase.

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Comments

  1. Peter16 January 2023 at 16:08

    China is already way too crowded so a decline in population is not a bad thing. I don't see it as bad at all. What's bad is their rapid and bad zero-Covid policy exit.

    ReplyDelete
    Replies
    1. Lois16 January 2023 at 16:17

      Yes, that exit will hurt them a lot in the following months and perhaps even years.

      Delete
    2. Jane16 January 2023 at 18:50

      I think that China could do better with a smaller population. It already has a lot of people.

      Delete

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