The world’s second-largest economy narrowly avoided contracting in the second quarter due to widespread COVID-19 lockdowns and analysts said Beijing’s full-year growth target of around 5.5% looked increasingly unattainable.
Chinese leaders “have signaled they will not embark on a massive stimulus just to hit the national target,” Capital Economics noted, adding that Beijing said it would work to stabilize the troubled property market, which has been putting heavy pressure on activity in the past year. .
“We’re expecting official GDP growth for 2022 of no more than 4% and we think in reality the economy may not grow at all this year.”
The Gross Domestic Product grew by only 2.5% in the first half of the year compared to the previous year, which points to great pressure in the second part of the year, in a context of fears of a world recession, the uncertainties of the war in Ukraine and concerns about recurring COVID lockdowns.
While much of the rest of the world has been trying to live with the virus, China showed no signs of backing down on its tough zero-COVID monetary policy.
After a Politburo meeting in April, Xinhua reported that China “will work hard to achieve the annual goals of economic and social development.”
On June 22, at the opening of a BRICS forum, Xi said China would take more measures to achieve its annual economic goals and minimize the impact of its COVID-19 prevention and control measures as much as possible. But during an inspection tour in the central city of Wuhan on June 28, Xi said China “will strive to achieve a relatively good level of economic development this year.”
Xinhua said on Thursday that large provinces should take the lead in growing China’s economy, and those that are in a position to achieve their economic goals should do so.
“The government did not say what the relationship is between ‘best possible results’ and the GDP target of around 5.5%,” said Qu Qing, head of investment consulting at Huachuang Securities. “Instead, ‘best possible outcomes’ mean that local economies must do everything they can to achieve their economic goals.”
By Ryan Woo and Ellen Zhang of Reuters Agency
Source: Ambito
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