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China’s pandemic-defying GDP growth slowed late last year

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Pandemic-defying China's GDP growth slowed in the final months of 2021, official data showed on Monday in a worrying sign for the global economy as Beijing's central bank cut a key interest rate.The world's second-largest economy also posted the lowest birthrate since the founding of Communist China in 1949, adding to a looming demographic crisis.

China's economy, a key engine of global growth, expanded 8.1 percent in 2021 on the back of its strong recovery from the virus, data from the National Bureau of Statistics (NBS) showed, beating forecasts of 8. 0 percent in an AFP poll.
But much of that growth came in the first half of the year, with the economy hit by a series of shocks towards the end of 2021.
China has been grappling with recent virus outbreaks, a cascading housing market decline and a series of far-reaching regulatory crackdowns in some sectors.

Figures on Monday showed growth in the fourth quarter was the slowest in more than a year, at 4 percent, down from 4.9 percent in the third quarter.
China's central bank also lowered the rate on its one-year policy loans to 2.85 percent, the first drop since early 2020 at the height of the pandemic and a clear sign that the outlook for the year remains being uncertain.
NBS spokesman Ning Jizhe warned on Monday that
China’s pandemic-defying GDP growth slowed late last year

Pandemic-defying China‘s GDP growth slowed in the final months of 2021, official data showed on Monday in a worrying sign for the global economy as Beijing’s central bank cut a key interest rate.

The world’s second-largest economy also posted the lowest birthrate since the founding of Communist China in 1949, adding to a looming demographic crisis.

China‘s economy, a key engine of global growth, expanded 8.1 percent in 2021 on the back of its strong recovery from the virus, data from the National Bureau of Statistics (NBS) showed, beating forecasts of 8. 0 percent in an AFP poll.

But much of that growth came in the first half of the year, with the economy hit by a series of shocks towards the end of 2021.

China has been grappling with recent virus outbreaks, a cascading housing market decline and a series of far-reaching regulatory crackdowns in some sectors.

Figures on Monday showed growth in the fourth quarter was the slowest in more than a year, at 4 percent, down from 4.9 percent in the third quarter.

China‘s central bank also lowered the rate on its one-year policy loans to 2.85 percent, the first drop since early 2020 at the height of the pandemic and a clear sign that the outlook for the year remains being uncertain.

NBS spokesman Ning Jizhe warned on Monday that “the national economy is under the triple pressure of contracting demand, supply shock and weakening expectations.”

The NBS also said the country’s birth rate hit a record low of 7.52 births per 1,000 people, and analysts warned faster-than-expected aging could deepen economic concerns.

Changes to the strict “one child policy” since 2016 have not resulted in the expected baby boom, as changing mindsets and rising costs of ownership make many young couples reluctant to have more than one child. son.

– ‘Covid zero’ pros and cons: China‘s ‘Covid zero’ policy has allowed life within its borders to largely return to normal.

Its factories have mostly avoided closures at a time of spiraling international demand, as many major economies imposed painful lockdowns and restrictions on working from home.

But its recovery in recent months was hampered in part by a series of outbreaks as officials re-imposed sweeping, strict containment measures that hit consumer demand.

Beijing’s push to curb excessive debt and rampant consumer speculation also shocked a sector that had long been a key local driver for China.

The growth was “dragged by a slowdown in the real estate sector … as well as new outbreaks of covid that increased restrictions in affected areas and heightened caution across the country, especially hurting demand for services,” said Tommy Wu of Oxford Economics.

Outbreaks have increased in recent months, albeit in small numbers by global standards.

China on Monday reported its highest number of infections since March 2020, with tens of millions affected by lockdowns, travel restrictions or mass testing.

Beijing has been on high alert as it prepares to host the Winter Olympics in a firm “closed loop,” with new restrictions requiring testing before and after travel to the capital.

The 13 million residents of Xi’an, a major tourist city, have been in lockdown for almost a month.

Outbreaks have also hit key port cities and manufacturing hubs.

– Economic pressure: Key industrial areas also experienced power outages due to an emissions reduction campaign, supply chain issues and rising energy costs in the second half of 2021.

In December, industrial production grew more than expected by 4.3 percent, the NBS said. For the full year, industrial production grew 9.6 percent.

But retail sales growth slowed sharply to 1.7 percent last month, down from 3.9 percent in November, as waves of Covid restrictions dampened consumer confidence.

ING economist Iris Pang told AFP this was also due to a bottleneck in car production, a trend likely to continue as the chips needed for production remain in short supply.

The urban unemployment rate rose to 5.1 percent in December.

“Economic growth is clearly under pressure, (and) the recent Omicron outbreaks in China have exacerbated downside risk,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

China also looks set to see another quiet Lunar New Year, normally a key time to spend as hundreds of millions commute across the country, with many workers being told not to travel due to Covid.

Source Credit: TheGuardian

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