In 2022, China’s GDP grew by just 3 per cent, the worst since the Mao era. Similar economic situations were witnessed during Great Leap Forward and Cultural Revolution…reports Asian Lite News
China’s economy, which is going through turbulence, is unlikely to see improvement anytime soon as President Xi Jinping’s protectionist policies and zero Covid policy is playing an important role in the poor prospects of its economy, reported Global Strat View.
Hong Kong-based economist Zhiwei Zhang highlighted the negative impact of Covid infections and the Xi government’s dependence on demographics in China’s economy. “Going forward, demographics will be a headwind. Economic growth will have to depend more on productivity growth, which is driven by government policies,” he said.
In 2022, China’s GDP grew by just 3 per cent, the worst since the Mao era. Similar economic situations were witnessed during Great Leap Forward and Cultural Revolution, reported Global Strat View.
Instead, it is set to be under the weather for a long time, thanks to the severe blows expected as fallouts of the uncontrollable Covid-infections and the demographic crisis.
At the same time, it has been struck with a new problem– a lower workforce due to a declining population. These factors will likely seriously impact all major sectors of China’s economy, such as manufacturing, agriculture, and services, reported Global Strat View.
Japan Centre for Economic Research, a private think tank, has predicted that China’s GDP would not be able to surpass that of the US even after 2036 due to a declining labour force.
Many experts and observers are holding Chinese President Xi Jinping’s mismanagement of the Covid crisis, especially his Zero Covid policy, for the current economic situation in China, reported Global Strat View.
High domestic inflation, power crisis, and geopolitical tensions are some roadblocks created by Xi’s government that will hurt China’s economic recovery.
Xi’s Zero Covid Policy that imposed harsh restrictions on public movement and businesses has led to widespread anger.
The policy was revoked abruptly a few weeks ago, leading to confusion and disturbance in society. This caused Covid cases to go up, making people sick, thus naturally slowing down business activities, reported Global Strat View.
Renaud Anjoran, CFO of Hong Kong-based supply chain management firm Sofeast Limited, said output was slow as over 40 per cent of the workforce, including top officials, was down with Covid.
“The situation is so volatile. China production is going to be impacted for some time to come,” he said.
Moreover, China’s exports saw an annual increase in 2022, retail sales and real estate saw negative growth. The ongoing wave of Covid has led to chaos in China as factories are shut, transports are disrupted, and workers are refraining from going to work while consumer spending has lowered, reported Global Strat View.
“Many workers have had salary cuts in 2022 with all the lockdowns. Consumer confidence is very low. A lot of small and medium-sized enterprises have already gone out of business,” said Shaun Rein, managing director of the China Market Research Group.
China’s economy saw a sharp decline in the fourth quarter of 2022, coinciding with the Covid crisis’s latest episode. These recent developments have given a glimpse into the future growth prospects for the Chinese economy, reported Global Strat View.
Harry Murphy Cruise, an economist at Moody’s Analytics, said, “China’s 2023 will be bumpy; not only will it have to navigate the threat of new COVID-19 waves, but the country’s worsening residential property market and weak global demand for its exports will be significant brakes.”
Meanwhile, China’s shrinking population means a declining workforce. It will damage China’s stronghold of the manufacturing sector in the long term as a cheap labour force will not be available, reported Global Strat View.
Yi Fuxian, a demographer at the University of Wisconsin-Madison, states that the demographic problem will add to China’s economic slowdown and manufacturing recession. “China’s demographic and economic outlook is much bleaker than expected,” he said. (ANI)