BEIJING (Xinhua) The construction industry and real estate sales have also slowed. Due to growing prices and sluggish sales, many small firms have closed. The remuneration of civil officials is being reduced by debt-ridden municipal governments.
In the closing months of last year, China’s economy slowed significantly as the government took steps to curb real estate speculation, which harmed other sectors as well. Consumer spending was also harmed by lockdowns and travel restrictions imposed to contain the coronavirus. A wave of layoffs has resulted from new restrictions affecting everything from internet enterprises to after-school tutoring services.
China’s National Bureau of Statistics reported on Monday that economic output from October to December was just 4% higher than the same period the previous year. This was a slowdown from the 4.9 percent rise seen in the third quarter, which ran from July to September.
Why is China’s growth slowing down?
The pace of growth is at its lowest level since 1960, and it confirms the findings of last May’s once-a-decade census, which revealed an average annual rise of 0.53 percent, down from 0.57 percent between 2000 and 2010.
China, like much of east Asia, is experiencing a population crisis, with falling birthrates and forecasts of negative population growth and an aging population. According to data released on Monday, China’s share of people over 60 and up increased from 18.7% in 2020 to 18.9% in 2019.
“The demographic crisis is well-known,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “However, the rate of population ageing is certainly greater than predicted.”
“This indicates that China’s total population may have peaked in 2021.” It also suggests that China’s potential development is declining faster than anticipated.”
To combat the decrease, Beijing has planned sweeping reforms, including raising the retirement age. A three-child policy has taken the place of the two-child policy, which was implemented in 2016 and resulted in a small increase in births before decreasing again.
Young Chinese people’s reluctance to have children is commonly attributed to high living costs, delayed marriages, and a lack of social mobility. Beijing has responded by banning expensive private tuition and promising improved access to childcare and maternity leave.
Prof. Wang Feng, an Asian demography expert at the University of California Irvine, said the findings proved the core issues were deeper than policymakers realized.
“Without addressing the deeply rooted causes discouraging young Chinese from marrying and having children, from gender inequality to high living costs, what we are seeing now is likely just the start of a further decline in birthrate and a prolonged process of population decline in China,” says the report.
China’s economy could also be in jeopardy, with GDP statistics released alongside population estimates suggesting a sharp drop in the latter months of 2021.
China, the world’s second-largest economy, announced a higher-than-expected year-on-year GDP growth of 8.1 percent, well above the government’s forecast of 6%, but with the expansion concentrated in the first half of the year. It increased by 4% in the fourth quarter, down from 4.9 percent in the third.
“The domestic economy is under triple pressure from demand contraction, supply shock, and decreasing expectations,” said Ning Jizhe, a bureau spokesman.
Consumer preferences have changed dramatically in the last year, as has government participation in major Chinese businesses. Retail sales increased by 1.7 percent in December, down from 3.9 percent in November.
“Economic growth is plainly stifled, (and) recent Omicron outbreaks in China have heightened the probability of a downturn,” Zhang said.
Construction has slowed and property sales have suffered as a result of a development crisis, notably Evergrande’s persistent financial woes.
Waves of layoffs have also occurred as a result of government interference in the $1 billion private tutoring industry and continuous crackdowns on the tech sector. Electricity cuts have been blamed on an emissions-reduction campaign, supply chain challenges, and limitations on some imported coal, as well as rising power prices.
Will China’s economic growth slow down?
(Reuters) – BEIJING, Jan 13 (Reuters) – According to a Reuters poll, China’s economic growth would fall to 5.2 percent in 2022 before stabilizing in 2023 as the central bank gradually eases policy to avoid a deeper slump.
Is China’s economy expected to slow in 2021?
China’s economy grew at an annual rate of 8.1 percent in 2021, but Beijing is under pressure to boost activity following a sharp downturn in the second half. 5:53 a.m., January 17, 2022
Why does China exaggerate its GDP?
The Federal Reserve Bank’s researchers feel China’s GDP statistics is “overstated,” but for a different reason. They explained that this is due to the fact that the country’s economic data system is still a “work in progress.”
“The reality is that China’s economic growth is more difficult to capture as efficiently as growth in industrialized countries.”
However, some argue that China’s unprecedented economic growth has a more straightforward cause.
“What it does rely on is producing economic results – that is the Chinese Communist Party’s implicit commitment with the Chinese people.”
“They’re under a lot of pressure to generate genuine results, so when the economy falters, China’s leadership is almost certain to respond with stimulus.”
Will China follow Japan’s lead and crash?
In the following decades, China’s demographic trajectory is projected to mimic Japan’s: China’s demographic “bomb has gone off,” according to Allianz’s Riddell. According to Riddell, demographic issues contribute to debt concerns, as high levels of investment appear less appropriate for a slowing and ageing economy.
Is India’s population growing or shrinking?
The country has so far attained its goal of stability. According to a study published in the journal Lancet, even if India’s fertility rate continues to fall at its current rate, the country’s population could shrink to 1 billion (100 crores) in 80 years (by the end of the century), equivalent to the population of several countries. The fertility rate would have plummeted from 2.0 to 1.27 by then, according to the analysis.
Is China’s economy in free fall?
In the fourth quarter of 2021, economic output increased by 4%, slowing from the previous quarter. As home buyers and consumers become more cautious, growth has slowed.
Who has a more prosperous economy? America or China?
China’s GDP is expected to reach $15.92 trillion in 2020, according to market research firm IHS Markit, with export manufacturing growth and funding for new projects pushing it over $18 trillion last year. According to the market research organization, the US GDP hit $23 trillion last year.
Economists predict that the country, which has already been recognized for rapid economic growth over the previous 20 years, would see the government acquire more control over important industries after intervening in others, including the internet, in 2021.
In 2021, what would India’s GDP be?
In its second advance estimates of national accounts released on Monday, the National Statistical Office (NSO) forecasted the country’s growth for 2021-22 at 8.9%, slightly lower than the 9.2% estimated in its first advance estimates released in January.
Furthermore, the National Statistics Office (NSO) reduced its estimates of GDP contraction for the coronavirus pandemic-affected last fiscal year (2020-21) to 6.6 percent. The previous projection was for a 7.3% decrease.
In April-June 2020, the Indian economy contracted 23.8 percent, and in July-September 2020, it contracted 6.6 percent.
“While an adverse base was expected to flatten growth in Q3 FY2022, the NSO’s initial estimates are far below our expectations (6.2 percent for GDP), with a marginal increase in manufacturing and a contraction in construction that is surprising given the heavy rains in the southern states,” said Aditi Nayar, Chief Economist at ICRA.
“GDP at constant (2011-12) prices is estimated at Rs 38.22 trillion in Q3 of 2021-22, up from Rs 36.26 trillion in Q3 of 2020-21, indicating an increase of 5.4 percent,” according to an official release.
According to the announcement, real GDP (GDP) or Gross Domestic Product (GDP) at constant (2011-12) prices is expected to reach Rs 147.72 trillion in 2021-22, up from Rs 135.58 trillion in the first updated estimate announced on January 31, 2022.
GDP growth is expected to be 8.9% in 2021-22, compared to a decline of 6.6 percent in 2020-21.
In terms of value, GDP in October-December 2021-22 was Rs 38,22,159 crore, up from Rs 36,22,220 crore in the same period of 2020-21.
According to NSO data, the manufacturing sector’s Gross Value Added (GVA) growth remained nearly steady at 0.2 percent in the third quarter of 2021-22, compared to 8.4 percent a year ago.
GVA growth in the farm sector was weak in the third quarter, at 2.6 percent, compared to 4.1 percent a year before.
GVA in the construction sector decreased by 2.8%, compared to 6.6% rise a year ago.
The electricity, gas, water supply, and other utility services segment grew by 3.7 percent in the third quarter of current fiscal year, compared to 1.5 percent growth the previous year.
Similarly, trade, hotel, transportation, communication, and broadcasting services expanded by 6.1 percent, compared to a decline of 10.1 percent a year ago.
In Q3 FY22, financial, real estate, and professional services growth was 4.6 percent, compared to 10.3 percent in Q3 FY21.
During the quarter under examination, public administration, defense, and other services expanded by 16.8%, compared to a decrease of 2.9 percent a year earlier.
Meanwhile, China’s economy grew by 4% between October and December of 2021.
“India’s GDP growth for Q3FY22 was a touch lower than our forecast of 5.7 percent, as the manufacturing sector grew slowly and the construction industry experienced unanticipated de-growth.” We have, however, decisively emerged from the pandemic recession, with all sectors of the economy showing signs of recovery.
“Going ahead, unlock trade will help growth in Q4FY22, as most governments have eliminated pandemic-related limitations, but weak rural demand and geopolitical shock from the Russia-Ukraine conflict may impair global growth and supply chains.” The impending pass-through of higher oil and gas costs could affect domestic demand mood, according to Elara Capital economist Garima Kapoor.
“Strong growth in the services sector and a pick-up in private final consumption expenditure drove India’s real GDP growth to 5.4 percent in Q3.” While agriculture’s growth slowed in Q3, the construction sector’s growth became negative.
“On the plus side, actual expenditure levels in both the private and public sectors are greater than they were before the pandemic.
“Given the encouraging trends in government revenues and spending until January 2022, as well as the upward revision in the nominal GDP growth rate for FY22, the fiscal deficit to GDP ratio for FY22 may come out better than what the (federal) budget projected,” said Rupa Rege Nitsure, group chief economist, L&T Financial Holdings.
“The growth number is pretty disappointing,” Sujan Hajra, chief economist of Mumbai-based Anand Rathi Securities, said, citing weaker rural consumer demand and investments as reasons.
After crude prices soared beyond $100 a barrel, India, which imports virtually all of its oil, might face a wider trade imbalance, a weaker rupee, and greater inflation, with a knock to GDP considered as the main concern.
“We believe the fiscal and monetary policy accommodation will remain, given the geopolitical volatility and crude oil prices,” Hajra added.
According to Nomura, a 10% increase in oil prices would shave 0.2 percentage points off India’s GDP growth while adding 0.3 to 0.4 percentage points to retail inflation.
Widening sanctions against Russia are likely to have a ripple impact on India, according to Sakshi Gupta, senior economist at HDFC Bank.
“We see a 20-30 basis point downside risk to our base predictions,” she said. For the time being, HDFC expects the GDP to rise 8.2% in the coming fiscal year.