SHANGHAI – China reported 3 percent growth in 2022, missing the 5.5 percent target set by Beijing and ending a year dragged down by “zero COVID”.
The world’s second-largest economy grew 2.9 percent in the fourth quarter of 2022, up from 3.9 percent in the third quarter, according to the National Bureau of Statistics.
After the government abruptly lifted COVID-19 restrictions in early December, China faced a spate of infections, straining supply chains and hurting consumer enthusiasm as people took time to recover.
For the month of December, retail sales shrank 1.8 percent year-on-year, better than the 8.6 percent decline previously forecast by a Reuters poll. For the full year, retail sales declined 0.2 percent year-on-year.
Apparel, beauty and jewelry sales declined in 2022.
Online retail sales grew 4 percent year-on-year to nearly 13.8 trillion renminbi, or $2.04 trillion, in 2022. Online accounted for about 31 percent of total retail sales.
At an agenda-setting meeting on economic policy in December, China’s leaders pledged to “put consumption first” by supporting the digital economy and prioritizing job creation.
China’s urban unemployment rate was 5.5 percent in December, and the youth unemployment rate for workers aged 16-24 hovered 16.7 percent in December, down slightly from 17.1 percent in November.
The bureau also revealed that China’s population was beginning to shrink for the first time in 60 years, adding pressure on a slowing economy. China’s birth rate was 6.77 births per 1,000 people, compared to 7.52 births in 2021.
Despite the bleak summary, investors have largely been looking to 2022 as China moves towards reopening and restarting the economy.
The International Monetary Fund forecasts China’s GDP to grow 4.4 percent in 2023, while Alicia Garcia-Herrero, chief Asia-Pacific economist at asset management firm Natixis, expects GDP growth in 2023 to be at least 5.5 percent percent can reach.
Most analysts expect China’s economy to recover quickly in the second quarter. According to Reuters sources, China is likely to target 5 percent growth in 2023, facilitated by policy support to reach that target.
For the luxury and fashion sector, Barclays expects China’s growth to recover from single-digit to double-digit declines to reach 9 percent growth in 2023, with China’s upper-middle class and wealthy individuals driving sales growth in the market.
“Meanwhile, other mid-range consumers may feel more confident about spending in 2023,” according to a recent Barclays report. According to Xiaohe Ma, a researcher with the Academy of Macroeconomic Research, in 2019 435.4 million people belonged to the middle class, which makes up more than 31 percent of the population.
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