China's GDP Falls to 3% in 2022, Second Lowest in 50 Years

Hit severely by the zero- According to official figures on Tuesday, China's GDP dropped to 3% in 2022 due to policies and a fall in the real estate market. The world's second-largest economy saw its second-lowest growth rate in 50 years. China's annual GDP was 121.02 trillion yuan ($17.94 trillion) in 2022, falling short of the statutory target of 5.5 percent, according to the National Bureau of Statistics (NBS).

Is Covid the reason for the low rate of China’s GDP?

The sluggish pace was mainly attributed to the rigidly enforced zero-Covid policy, which resulted in frequent lockdowns, as well as the ruling Communist Party's crackdown on large industrial businesses, as well as the persistent real estate crisis. This is the weakest growth rate in the Chinese economy since 1974 when GDP increased by 2.3 percent.

What can be the other factors for the low GDP in China?

China's dollar GDP fell significantly this year, from $18.12 trillion in 2021 to USD 17.94 trillion in 2022, mainly owing to a significant increase in the dollar versus the RMB (the Chinese currency) in 2022. In RMB terms, the Chinese economy posted 121.02 trillion yuan last year, compared to 114.37 trillion yuan in 2021.

GDP growth in the fourth quarter was 2.8 percent year on year, compared to 3.9 percent in the third quarter, as periodic city lockdowns, including important industrial and economic hubs like Shanghai, severely hurt it.

Industrial output, a key economic indicator, increased by 3.6% year on year in 2022 and 1.3% in December. In 2022, China's fixed-asset investment increased by 5.1%. 

Isolation from the rest of the world

The NBS noted "despite the overall stable economic performance," the foundation for economic recovery remained "unstable." According to the country, it would thoroughly deepen reform and opening up, emphasizing increasing market confidence to support economic improvements and revitalize the economy. Last year's annual GDP growth of 3% represented a downturn from 8.4% in 2021, a dramatic decrease attributed to various causes, most notably China's isolation from the rest of the world due to its zero-covid policy. China had set an average economic growth target of roughly 5.5% for the year, but it remained unrealistic owing to the coronavirus's impact.

Conclusion

Meanwhile, the urban surveyed unemployment rate was 5.5 percent in December, down from 5.7 percent in November, amid estimates that one in every five Chinese people was unemployed. However, according to NBS statistics, China's job market will remain relatively steady in 2022.