The strict corona measures have weighed heavily on China’s economy in the past year. As the statistics office in Beijing announced on Tuesday, the economy of the most populous country grew by three percent compared to the previous year. Growth in the fourth quarter was given as 2.9 percent.
The government had aimed for a target of around 5.5 percent for 2022, which was therefore not achieved. In 2021, China’s economy had grown by 8.4 percent. Economists had recently expected even weaker growth. The World Bank forecast annual growth of just 2.7 percent for the Chinese economy.
In particular, the strict zero-Covid strategy with lockdowns and other restrictions slowed down the economy last year. At the same time, however, China is also suffering from a serious real estate crisis, high levels of debt and weak domestic demand.
Abrupt U-turn
On December 7, the leadership in Beijing made an abrupt about-face and abolished most of the corona measures after a good three years. Since then, the corona virus has been spreading rapidly in the country, which is now also having a negative impact on economic activity.
Many metropolises resembled ghost towns in December, as people did not go out because of illness or fear of infection. Life is now back to normal. But there are still reports of overwhelmed hospitals and crematoria. The State Health Commission has given the number of corona victims since the beginning of December at around 60,000. However, projections by international experts assume significantly higher numbers. According to estimates by the London-based data processor Airfinity, there have been over 400,000 deaths since the beginning of December. By the end of April, the number of corona deaths could increase to 1.7 million.
German companies are hoping that China’s economy will recover this year. “China’s recent departure from the zero-Covid policy is a welcome development and will help restore business confidence in the medium and long term,” said Jens Hildebrandt, executive board member of the German Chamber of Commerce (AHK) in Beijing. “From the second or third quarter, many companies expect a more positive development for their business.” However, this is dependent on consumer confidence, which has suffered in recent years.
“Even if there are now high hopes for a quick recovery, the Chinese economy is still far from normalizing,” warns economist Max Zenglein from the China Institute Merics in Berlin against expectations that are too high. The upswing will not be “a sure-fire success”.
Warning of an “unimaginable” population crisis
The Chinese economy also faces major challenges in the long term, as underlined on Tuesday by the Beijing Statistics Office on population development. China’s population shrank last year for the first time in six decades. At the end of December, the world’s most populous country had 1.411 billion inhabitants, around 850,000 fewer than a year earlier. Experts speak of a “turning point” in China’s history and warn of the devastating consequences of an “unimaginable” population crisis.
“China’s demographic and economic prospects are bleaker than expected,” says US social scientist Yi Fuxian of the University of Wisconsin. “China will have to go through a contraction.” It must also change its social and economic policies. The surplus of working people, which had boosted China’s economic miracle as the “workbench of the world”, is now being followed by a shortage of workers: “China’s manufacturing sector is becoming understaffed and aging – and is declining as quickly as Japan’s,” says Yi Fuxian.
Foreign trade with China continues to be of central importance for Germany. However, trade relations are getting more and more out of balance, according to an analysis by the Germany Trade and Invest (GTAI) agency published on Tuesday. While exports to China only grew slowly until November last year, imports from the world’s second largest economy increased rapidly. “This increases dependence on China and the trade deficit is heading for a negative record,” it said.
