China posts 3% GDP growth in 2022, weakest in decades

China posted its weakest economic growth in decades on the back of strict virus controls.

Strict virus controls and a real estate crisis drove China’s economic growth down to 3% in 2022 with the fourth quarter clocking 2.9% despite a chaotic exit from the zero-COVID policy.

The 2.9% growth in the fourth quarter was better than the estimates but still pointed towards the pain due to surging cases. Gross domestic product (GDP) had been forecast to expand 1.8% from a year earlier, according to a Reuters poll of analysts, slowing from 3.9% in the third quarter.

The Chinese administration had set a target of 5.5% GDP growth in 2022 but the zero-COVID policy and a chaotic exit leading to surge in cases towards the end of the year took a toll on the economy.

This is the second lowest GDP growth since the 1970s. However, analysts are now focusing more on the rebound in the current year even as the world stares at a recession.

Chinese government eased its strict zero-COVID policy under pressure from a wave of protesters which led to a surge in cases in December and took a toll on the economic rebound.

Also read: China population shrinks for first time in over 60 years: Official data
A revival in the current year depends highly on the trajectory of the COVID cases. Demand could take a hit if wary consumers stay away from shopping malls and restaurants amid a surge in COVID-19 infections. The government says the peak of that wave appears to have passed.

The weakness in China's real estate sector is another major worry that could impede revival in the current year. Not just that, the recession in major economies will hit exports that is one of the major drivers of growth.

Beijing has also hinted at rolling back some of the strict measures that wiped hundreds of billions of dollars worth of share prices of major tech giants like Alibaba.