SHANGHAI — China reported 3 percent growth in 2022, missing the 5.5 percent target set by Beijing and capping off a year dragged down by “zero-COVID-19.”
The world’s second-largest economy grew 2.9 percent in the fourth quarter of 2022, down from 3.9 percent in the third quarter, according to the National Bureau of Statistics.
After the government abruptly lifted COVID-19 curbs in early December, China saw a wave of infections, which put a strain on supply chains and hurt consumption enthusiasm as people took time to recover.
For the month of December, retail sales shrank 1.8 percent year-over-year, better than the 8.6 percent drop previously forecasted by a Reuters poll. For the full year, retail sales logged a 0.2 percent year-over-year decline.
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Sales of apparel, beauty and jewelry all declined in 2022.
Online retail sales expanded 4 percent year-over-year to almost 13.8 trillion renminbi, or $2.04 trillion, in 2022. Online accounted for around 31 percent of overall retail sales.
At an agenda-setting economic policy meeting in December, China’s top leaders pledged to “put consumption at the forefront” by supporting the digital economy and prioritizing job creation.
The urban unemployment rate in China was 5.5 percent in December and the youth unemployment rate, for workers ages 16 to 24, hovered around 16.7 percent in December, a slight drop compared to 17.1 percent in November.
The bureau also revealed that China’s population started shrinking for the first time in 60 years, which adds pressure to a slowing economy. China’s birth rate was 6.77 births per 1,000 people, down from 7.52 births in 2021.
Despite the dismal roundup, investors have mostly looked past 2022 as China heads toward reopening and rebooting the economy.
The International Monetary Fund projects that China’s GDP will grow 4.4 percent in 2023, while Alicia Garcia-Herrero, chief economist of Asia-Pacific at wealth management firm Natixis, believes that GDP growth will be able to reach at least 5.5 percent in 2023.
Most analysts expect China’s economy to rebound rapidly in the second quarter. China will likely aim for 5 percent growth in 2023 facilitated by policy support to meet that goal, according to Reuters’ sources.
For the luxury and fashion sector, Barclays expects China’s growth to rebound from single to double-digit declines to reach 9 percent growth in 2023, with China’s upper middle class and high net-worth individuals driving sales growth in the market.
“Meanwhile, other middle-class consumers may be more confident to spend in 2023,” said a recent Barclays report. According to Xiaohe Ma, a researcher with the Academy of Macroeconomic Research, 435.4 million people belonged to the middle class in 2019, which makes up more than 31 percent of the population.