By most international standards, China’s 4 per cent year-on-year growth in the fourth quarter of last year was a pretty solid performance. Yet while it was slightly above most analysts’ predictions, it was the slowest pace of expansion for 18 months — representing a slide from 6.5 per cent growth during the same period of 2020. Overall, gross domestic product grew 8.1 per cent in 2021. Any sustained chill in Chinese expansion will have a global impact: according to IMF numbers, China is the biggest contributor to global GDP and was set to account for more than one-fifth of the total global growth in the five years to 2026.
It is notable that the three main factors exerting a drag on the Chinese economy derive in large part from government policies. A months-long series of crackdowns has targeted industries such as fintech, online education and entertainment as well as perceived societal ills such as celebrity culture, gaming and effeminate fashion trends.
Sluggishness in the property market, which by some estimates contributes close to 30 per cent of GDP, stems from Beijing’s insistence that real estate developers must reduce debt ratios to within “three red lines” announced in 2020. The crisis at Evergrande, the world’s most indebted property company, and several other developers is weighing heavily on real estate activity.