China’s economy grew by 3.2% in 2022, well below forecasts: Center for Economics and Business Research

According to the Center for Economics and Business Research (CEBR), the Chinese economy grew by 3.2 percent in 2022. That was well below forecasts and appears to have been caused by lockdowns related to its zero-Covid policy, the London-based consultancy said in a report. Zero Covid has been abandoned in Hong Kong, albeit not entirely successfully, and the consultancy expects it will not be fully abandoned on the mainland until the population is better vaccinated. Cebr said authorities need to weigh the significant public health risks from easing restrictions before immunity levels are sufficiently elevated to match those to the economy from the suppression of activities.

China is an upper-middle-income country with a PPP-adjusted GDP per capita of US$21,291 in 2022. Cebr said in the report – World Economic League Table 2023 – that the country is in line with international trends with a Growth of 2.2 percent in 2020 defied. It was followed by further expansion of 8.1 percent in 2021. However, a 3.2 percent slowdown in growth is expected in 2022, the consulting firm said in the report published on Monday.

PPP GDP is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power against GDP as the US dollar in the United States. According to the report, China’s official growth targets are to achieve “high-income” status by 2025, a status that has likely already been achieved, and a new target of reaching medium-high economy status by 2035. Achieving the latter means achieving a GNI per capita of $20,000 in PPP dollars using the Atlas method (China’s GNI per capita by this measure was $11,890 in 2021, although the data has since been revised upwards). Cebr said its forecasts predict China’s growth could fall slightly short of what is needed to meet that goal. Gross national income (GNI) is defined as gross domestic product plus net receipts from abroad from compensation of employees, property income and net taxes minus production subsidies.

The country achieved a favorable compromise between growth and inflation in 2022 with expected inflation of 2.2 percent. According to the report, this contrasts with the sharp rise in inflation seen in many economies around the world. Meanwhile, a feature of 2022 will be continued tightness in the job market, Cebr said. Although unemployment is expected to rise 0.2 percentage points to 4.2 percent in 2022, it remains relatively low, according to the consultancy.

This will have boosted consumption in recent months. While government debt as a percentage of GDP remains moderate compared to some economies in the region, it is expected to have reached 76.9 percent in 2022, up from 71.5 percent in 2021, according to Cebr. The consultancy said that China was ranked 31st in the World Bank’s 2020 Ease of Doing Business Index, indicating that the country’s regulatory environment has made significant progress compared to other comparable countries. In 2016, the country was ranked 77th.

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