gdp

China’s GDP Growth Slows To 4.0% – Free PDF Download


 

What has happened?

  • China’s economy grew at the slowest pace in 1-1/2 years in the fourth quarter,
  • Dragged by weaker demand due to a property downturn, curbs on debt and strict COVID-19 measures, raising heat on policymakers to roll out more easing steps.
  • China’s gross domestic product growth slowed to 4.0% on the year in the fourth quarter of 2021, delivering a full-year result of 8.1%.

  • But the number for October to December decelerated from the 4.9% growth achieved in the previous three months,
  • Hitting the weakest level since the 3.2% seen in the COVID-marred second quarter of 2020.
  • On a quarterly basis, the economy grew a modest 1.6% in the final term of 2021.

  • The country’s total GDP in 2021 reached 114.37 trillion yuan ($18 trillion), according to data released by the National Bureau of Statistics (NBS) on Monday.
  • In 2021, China’s GDP per capita was around $12,551, according to the NBS, nearing that of a “high-income country” as defined by the World Bank and overtaking the global average GDP per capita.

Challenges in China’s economy

  • The world’s second-largest economy, which cooled over the course of last year, faces multiple headwinds in 2022,
  • Including persistent property weakness and a fresh challenge from the recent local spread of the highly-contagious Omicron variant.
  • In a sign of continued concerns among consumers, retail sales added just 1.7% in December year on year, the slowest rate in 14 months.
  • Exports, which were one of the few areas of strength in 2021, are also expected to slow, while the government is seen continuing its clampdown on industrial emissions.

China’s zero covid policy

  • China’s zero-Covid policy aimed at controlling the pandemic prompted renewed travel restrictions within the country — including the lockdown of Xi’an city in central China in late December.
  • In January, other cities were also locked down in full or partially, to control pockets of outbreaks tied to the highly transmissible omicron variant.
  • Analysts have started to question whether the benefits of China’s zero-Covid strategy outweigh the costs, given how contagious and potentially less fatal the omicron variant is.
  • Goldman Sachs cut its forecast for China’s 2020 GDP growth based on expectations the zero-Covid policy will cause increased restrictions on business activity.
  • However, the analysts said the greatest impact would be on consumer spending.

Steps being taken

  • Analysts saw a possibility that the central bank will cut the rate on its medium-term lending facility (MLF) on Monday.
  • The central bank is set to unveil more easing steps, though it will likely favour injecting more cash into the economy rather than cutting interest rates too aggressively, policy insiders and economists said.
  • On Monday, the central bank added to that pattern of easing by cutting the one-year policy loans rate 10 basis points to 2.85 per cent.
  • Policymakers have also pledged to step up fiscal support for the economy, speeding up local government special bond issuance to spur infrastructure investment and planning more tax cuts.

Reducing inequality

  • China’s government last year unveiled a drive towards so-called common prosperity, highlighting a willingness to close the inequality gap at the expense of economic growth.
  • In 2020, Beijing introduced policies designed to reduce leverage at its biggest real estate developers, which last year contributed towards a cash crunch across the sector that hit land sales and construction.

conclusion

  • For 2022, the International Monetary Fund projects China’s annual economic growth will decelerate to 4.9%.

Q) The calculation of National Income at market prices is called?

  1. Non-monetary income
  2. Real income
  3. Money income
  4. None of the above

 

 

 

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