China’s economy slowed down in Quarter 4 of 2021, as gross domestic product growth came in at 4% (YoY). The downturn in real estate combined with a series of new COVID-19 outbreaks in the last months of 2021 disrupted the growth of the economy.
China’s GDP only registered a 4% growth in the last quarter of 2021, the country’s
weakest rate in a year and a half. The slowing growth can be explained by the
worsened crisis in the real estate market, new COVID-19 outbreaks, and Beijing’s
stringent zero-COVID policy. Sporadic lockdowns have hurt the consumption
during the year; retail sales rose barely 1.7% in December compared to the same
month 2020, a plummet from November’s 3.9% growth. The main driver of
economic growth in Quarter 4 was from industrial production, which recorded a
4.3% YoY increase in December and surpassed November’s 3.9%.
Despite the stagnant performance of quarter 4, the economy witnessed an annual
growth rate of 8.1% for the full year of 2021, significantly exceeding the Chinese
Government’s target of 6%. The growth was the highest in a decade, setting
China’s GDP 2021 at 114.37 trillion RMB (18 trillion USD). In the near term, it is
expected that the spread of new COVID variants will negatively affect sales and
consumption during the Lunar New Year, but this impact is likely to wear off in
Q2/2022. The economic outlook for China 2022 remains positive, as the country
has eased monetary policies, kept exports strong, and gradually gained more
control over the tumultuous real estate situation.
Asia Perspective
