Explainer | How much is China’s economy struggling and how much worse can it get?

Name: Xi Jinping charts China’s future course at 20th party congress
Uploaded: 2022-11-01T16:30:12.000Z
Duration: 6 min 23 s
Description: Xi Jinping charts China’s future course at 20th party congress

World’s second-largest economy has been facing setback after setback, and it is unclear whether recent GDP figures will mark the start of a sustainable recovery

China’s restrictive zero-Covid policy, property downturn and waning confidence among consumers and investors remain outsized economic threats

Reading Time:4 minutes

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Shanghai officials found 568 Covid-19 cases in October, prompting lockdowns for tens of thousands of residents in more than 20 residential areas and hindering consumption. Photo: AFP

Frank Tangin Beijing

Published: 12:30am, 2 Nov 2022Updated: 10:25am, 2 Nov 2022

China’s economy is experiencing a mild rebound and could be poised to receive a boost of momentum with the swearing-in of a new leadership line-up.

The world’s second-largest economy faces some stiff headwinds, including a property downturn, weak private investment, waning consumption and business confidence, plus external challenges that are only expected to intensify in the coming years.

Market worries seem to stem from Chinese politics and the stringent zero-Covid policy, and analysts say that the nation’s economic fundamentals provide a solid foundation on which policymakers should be able to build in the coming months.

06:23

Xi Jinping charts China’s future course at 20th party congress

How bad is China’s economy?

The Chinese economy appeared to be weathering the pandemic storm, experiencing an average growth rate of 5.1 per cent over the 2020-21 period. But then Omicron took hold early this year.

The rigid implementation of Beijing’s zero-Covid strategy, including snap lockdowns, mass testing and sometimes forced quarantine, plunged the nation’s second-quarter GDP growth to only 0.4 per cent.

The rebound, however, appeared to be under way as third-quarter GDP growth reached 3.9 per cent in both year-on-year and quarter-on-quarter terms, thanks to Beijing’s partial relaxation of coronavirus controls, and strong fiscal and monetary support, as well as pressure on local officials to deliver accomplishments.

The major economic headache includes a plunge in the property sector that will continue to weigh down growth, while the still-high level of jobless young adults poses a threat to social stability.

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