China economy 2022 review: another turbulent 12 months as coronavirus weighs heavy

Chinese mothers gave birth to 10.62 million babies in 2021, representing an 11.5 per cent drop from 12 million in 2020. The national birth rate also fell to a record low of 7.52 births for every 1,000 people in 2021, from 8.52 in 2020.

China also cut its benchmark lending rate for the second consecutive month in the latest move to shore up the cooling economy, while also lowering a mortgage reference rate for the first time in nearly two years.

China and Russia began the month by strengthening the interdependency of their economies as visiting President Vladimir Putin unveiled a series of agreements, including a new gas deal, during his meeting with Xi Jinping in Beijing at a time when Moscow was facing rising tensions over Ukraine.

Putin confirmed the deal to supply 10 billion cubic metres (353 billion cubic feet) of gas per year to China from Russia’s Far East via a new pipeline hours after landing in the Chinese capital ahead of the opening ceremony of the Winter Olympics.

China later announced it was fully open to Russian wheat imports, in the latest sign of their strengthening bilateral ties as the Ukraine crisis was unfolding before a global audience and in the wake of fresh sanctions being imposed on Moscow.

The announcement by China’s General Administration of Customs was made public hours after Russian troops launched a wide-ranging attack on Ukraine.

The impact of the war in Ukraine began to spread, disrupting global markets, with China nervously watching for any impact and for the possibility of any secondary sanctions.

Manufacturers in China were already starting to feel the pain of the unfolding crisis as financial sanctions placed on Russia started to filter through to export customers.

It was also confirmed global investors had withdrawn money out of China on an “unprecedented” scale since Russia invaded Ukraine in late February, according to a report by the Institute of International Finance, with the yuan seen likely to face more pressure in coming months.

The target was lower than the “above 6 per cent” goal for 2021. It also marked the lowest annual goal since 1991, barring the suspension of target-setting in coronavirus-hit 2020, and during 2000-02 following the Asian financial crisis.

President Xi also sent a strong message to Washington and its allies that China would firmly oppose decoupling, while saying its economy could play a lead role in global recovery as the world stood at a crossroads between the coronavirus pandemic, trade conflicts and war in Ukraine.

“The facts have proven again that a cold war mentality, hegemonism and power politics will only breach global peace,” he said at the opening of the Boao Forum for Asia, a China-led equivalent to the Davos Forum.

Closer to home, news emerged that deposits at four rural banks in the central Chinese province of Henan had been frozen since April 18, sparking a number of protests in the provincial capital of Zhengzhou.

Shanghai also started what would eventually become a two-month lockdown in an attempt to combat the impact of the coronavirus, which sent ripples throughout the region and also severely dragged down economy.

Beijing also unveiled a new round of stimulus measures to stabilise the nation’s faltering economy and support businesses.

The announcement by the State Council, chaired by Premier Li Keqiang, came as many analysts warned that Beijing will be hard-pressed to achieve its economic growth target of “around 5.5 per cent” for the year while sticking with strict coronavirus-control measures.

China’s retail sales dropped to the lowest since a 15.8 per cent drop in March 2020 after April’s reading fell by 11.1 per cent.

The surveyed jobless rate also rose to 6.1 per cent in April, which was the second highest reading on record, only behind 6.2 per cent in February 2020.

The Uygur Forced Labour Prevention Act – a US law that effectively bans American imports of all products from Xinjiang unless conclusive evidence shows that no forced labour was involved in their production – took effect.

Five Chinese firms were also added to the US ‘entity list’ for allegedly providing support to the Russian military.

Police in Henan province, meanwhile, shed new light on the alleged culprit behind arguably one of China’s largest financial scandals, in which billions of yuan worth of deposits – comprising the savings of thousands of people – were frozen at four rural banks in the central Chinese province.

China suspended natural sand exports to Taiwan, while also blocking imports of citrus fruits, chilled white scallops, frozen mackerel, confectionery, biscuits and bread after US House Speaker Nancy Pelosi defied repeated warnings from Beijing and met President Tsai Ing-wen in Taipei.

Multinational businesses in Taiwan also started laying plans to evacuate assets and personnel in case China attacked the island after the People’s Liberation Army began military drills.

China also confirmed the jobless rate for the 16-24 age group set another record high at 19.9 per cent in July.

It also cut its two key benchmark lending rates amid multiple challenges facing its slowing economy, with the larger cut to the mortgage reference gauge signalled particular concern for the nation’s housing market.

Sichuan province, meanwhile, was bearing the brunt of the country’s power shortage amid severe heatwaves that depleted the Yangtze River basin.

China’s home-grown C919 narrow-body passenger jet was certified to fly with President Xi urging the nation to “climb to the top of the world’s science and technology”.

The single-aisle C919, manufactured by the state-owned Commercial Aircraft Corporation of China (Comac) completed all its airworthiness certification work in September.

It obtained a “type certificate” issued by Civil Aviation Administration of China.

Economic growth in the first three quarters of the year stood at 3 per cent, missing market expectations.

But a rise in coronavirus cases saw local governments implement lockdowns, while the president of the American Chamber of Commerce in China said growing uncertainty coupled with competition from neighbouring countries was causing foreign companies to reassess operations.

China announced a raft of changes to its coronavirus restrictions at the start of the month, with 20 new measures announced by a State Council task force.

The producer price index, which reflects the prices that factories charge wholesalers for products, fell by 1.3 per cent in October, year on year, down from 0.9 per cent growth in September.

The state-owned company made the announcement at China’s biggest air show in Zhuhai, adding it had also received orders for 30 ARJ21, a short haul 90-seater passenger jet.

China’s exports and imports fell sharply in November due to coronavirus disruptions at home and weak global demand, with the country’s pandemic-driven export boom appearing to be over. Exports fell by 8.7 per cent from a year earlier to US$296 billion, after declining 0.3 per cent in October.

The annual tone-setting central economic work conference, meanwhile, showed how priority was increasingly being shifted to economic growth, even as coronavirus cases continued to surge nationwide.

Fresh vows highlighted how policymakers would prioritise restoring and expanding domestic consumption in 2023, deeming it as a critical task in stabilising the overall economy.

China’s top leadership also stressed the importance of equal treatment for the private sector, while also vowing to address the concerns of foreign investors.

China later confirmed its pivot away from its strict zero-Covid policy, with borders set to reopen on January 8.