Explainer | From US trade tensions to Beijing’s zero-Covid goal, 5 dilemmas facing China’s economy
- China’s economic growth is expected to slow in the fourth quarter and policymakers will have their work cut out stabilising it next year
- Deleveraging in the property market, trade tensions and a zero tolerance approach to Covid-19 could all weigh on the economy
China is likely to switch its focus to supporting economic growth next year after regulatory crackdowns that encompassed property, education, technology and coal use in 2021, analysts say.
The government tightened regulatory oversight this year to reinforce China’s socialist credentials ahead of the Communist Party’s 2022 national congress, step up efforts to rebalance long-term growth, and respond to growing tensions with the United States.
However, the crackdown has exposed risks to China’s growth model, which requires careful management of conflicting goals.
While there could be more regulatory measures, Larry Hu, chief China economist at Macquarie Capital, believes policymakers are likely to focus on defending a minimum 5 per cent gross domestic product (GDP) growth target next year and avoid making drastic changes that could upset the status quo.
China’s economy grew by 4.9 per cent in the third quarter of 2021 compared with a year earlier, down from the 7.9 per cent growth seen in the second quarter.