At a night market in Ruili (Yunnan), January 13, 2023. NOEL CELIS / AFP
The elites of Davos like the Chinese power dream of it: forget 2022, its restrictions, its boats staying at dock, its factories idle at best, its closed shopping malls and its deserted airports to better recover and so China will continue to be one of the main drivers of global growth in 2023.
The statistics published on Tuesday, January 17 show that the path will be difficult. In 2022, China’s gross domestic product (GDP) grew by just 3%. Worst since 1976, excluding 2020 (2.24%), marked by the country’s paralysis in the first quarter. Above all, far from the target announced in March 2022, which was “around 5.5%”. After growth – over a year – of 4.8% in the first quarter, 0.4% in the second, 3.9% in the third, China ends with a rise in activity – still over a year – of 2.9% in the fourth quarter.
In 2022, therefore, Chinese growth was in line with the global economy. For the first time in decades, it no longer played its role as a locomotive. On the contrary, other emerging markets have fared significantly better, even more the rest of the world has driven China up 10.5% in exports while imports are up not just 4.3%. Result: Foreign trade posted a record surplus of 5.863 billion yuan, or more than 800 billion euros (up from 597 billion euros in 2021). Whatever one may say, the decoupling of economies is far from obvious.
Urban unemployment on the rise
On the other hand, the Chinese consumer, in lockdown at home because of the zero-Covid policy, has remained frugal. Retail sales of consumer goods even fell by 0.2% over the course of the year. If total investments increased by 5%, this is mainly due to (public) investments in infrastructure (+9.4%) and manufacturing (+9.1%). As expected, real estate collapsed (−10%), sales of commercial space even fell by 24%.
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Another corollary to this low consumption: urban unemployment fell from 5.1% in December 2021 to 5.5% in December 2022 (among young people aged 16-24 it rose by 14.3% to 16 .7%). Inflation, for its part, remained under control with consumer prices rising by 2%.
In 2022, the cost of spending associated with the zero Covid strategy has been phenomenal. Guangdong Province alone (population 126 million, or a little less than a tenth of China’s population) estimates its own worth at 146.8 billion yuan in three years: 30.3 billion yuan in 2020, 45.4 billion in 2021 and 71 .1 billion in 2022. An exponential increase that says a lot about the infernal machine that the zero-Covid public spending policy has become, and largely explains its demise on December 7, 2022. Since it consists mainly of testing and policing to isolate even neighborhoods from cities, this spending cannot seriously qualify as an investment.
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