11 months ago • 2 mins
Data out on Tuesday showed that China’s economy expanded by 3% in 2022 – the slowest rate of growth, excluding the pandemic years, for nearly half a century.
What does this mean?
Spending most of 2022 cooped up in lockdowns meant that China was always going to have a tough time hitting its ambitious growth target of 5.5%. And let's face it, the 3% that the country did achieve is pretty glacial by its own track record. In fact, last year’s growth marked the first time in decades that the world as a whole outpaced China’s economic performance. But it’s not a total sob story: the country had a bit more pep in its step as the year drew to a close, and the fourth quarter’s growth actually outstripped economists’ predictions. So sure, Covid’s still a nuisance in China, but this weekend ushers in the year of the water rabbit, supposedly bringing patience and prosperity – so the country just might have luck on its side.
Why should I care?
Zooming out: See-saw.
Now that China’s reopening, there's one worry niggling at economists’ minds: whether this move will help or hinder the fight against inflation. See, some experts think that a reopened, re-invigorated China will be extra-thirsty for resources like oil, sending prices skyward. But others point out that an unfettered China could lead to unclogged supply chains and free-flowing goods, easing price pressures instead. Time will tell which factor packs a bigger punch…
The bigger picture: Baby bust.
China's one-child policy was scrapped in 2016, so you might expect the birth rate to be booming – especially given the boredom and pent-up energy that lockdowns entail. But China's population actually fell for the first time in 60 years in 2022, and that’s a problem. Just ask Japan: now labeled “the land of the setting sun”, its slipping population has held economic growth back for a generation. Maybe it’s time for a three-child policy.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
/3 • Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.