China economy grows 3%, population shrinks for first time in 6 decades

China's economy grew 3.0 percent in 2022, official data showed on Tuesday, one of the weakest rates in 40 years owing to the Covid-19 pandemic and a real estate crisis.

Beijing had set itself a target of 5.5 percent, a rate already much lower than the performance of 2021, when GDP increased by more than eight percent.

In the fourth quarter, China's economy grew 2.9 percent year-on-year, compared with 3.9 percent in the third quarter, the National Bureau of Statistics said (NBS).

The world's second-largest economy faced historic headwinds as 2022 drew to a close, with exports plunging last month due to a drop in global demand and rigid health restrictions that hammered economic activity.

Tuesday's figures represent China's worst growth figures since a 1.6 contraction in 1976 -- the year Mao Zedong died -- and excluding 2020, after the coronavirus emerged in Wuhan in late 2019.

According to Tuesday's data, China's industrial output rose 1.3 percent in December from a year ago, while retail sales contracted 1.8 percent.

Fixed-asset investment gained 5.1 percent last year, and the urban jobless rate fell to 5.5 percent last month from 5.7 percent in November.

"The good news is that there are now signs of stabilization, as policy support doled out towards the end of 2022 is showing up in the relative resilience of infrastructure investment and credit growth," Louise Loo, Senior Economist at Oxford Economics, said in a note.

Population

China's population, on the other hand, shrank last year for the first time in more than six decades, official data showed Tuesday, as the world's most populous nation faces a looming demographic crisis.

The nation of 1.4 billion has seen birth rates plunge to record lows as its workforce ages, in a rapid decline that analysts warn could stymie economic growth and pile pressure on strained public coffers.

The population stood at around 1,411,750,000 at the end of 2022, Beijing's National Bureau of Statistics (NBS) reported Tuesday, a decrease of 850,000 from the end of the previous year.

The number of births was 9.56 million, the NBS said, while the number of deaths was 10.41 million.

The last time China's population declined was in 1960, as the country battled the worst famine in its modern history, caused by the disastrous Mao Zedong agricultural policy known as the Great Leap Forward.

China ended its strict "one-child policy" -- imposed in the 1980s owing to fears of overpopulation -- in 2016 and began allowing couples to have three children in 2021.

But that has failed to reverse the demographic decline.

Many point to the soaring cost of living -- as well as a growing number of women in the workforce and seeking higher education -- as being behind the slowdown.

Chinese people are also "getting used to the small family because of the decades-long one-child policy", Xiujian Peng, a researcher at Australia's University of Victoria, told AFP.

"The Chinese government has to find effective policies to encourage birth, otherwise, fertility will slip even lower," she added.

Many local authorities have already launched measures to encourage couples to have children.

The southern megacity of Shenzhen, for example, now offers a birth bonus and allowances paid until the child is three years old.

A couple who has their first baby will automatically receive 3,000 yuan ($444), an amount that rises to 10,000 yuan for their third.

In the country's east, the city of Jinan has since January 1 paid a monthly stipend of 600 yuan for couples that have a second child.

Independent demographer He Yafu also points to "the decline in the number of women of childbearing age, which fell by five million per year between 2016 and 2021" -- a consequence of the ageing of the population.

"A declining and ageing population will be a real concern for China," Peng said.

"It will have a profound impact on China's economy from the present through to 2100."

'Zero-Covid' scrapped

China's economic woes last year sent reverberations across a global supply chain already struggling with waning demand.

Strict lockdowns, quarantines and compulsory mass testing prompted the abrupt closures of manufacturing facilities and businesses in major hubs -- including Zhengzhou, home of the world's biggest iPhone factory.

Beijing abruptly loosened pandemic restrictions in December in the wake of some of the biggest protests in years.

The World Bank has forecast China's GDP will rebound to 4.3 percent for 2023 -- still below expectations.

And the country is continuing to battle a surge in Covid cases that has overwhelmed its hospitals and medical staff.

Problems in the property industry are also still weighing on growth.

This sector, which along with construction accounts for more than a quarter of China's GDP, has been hit hard since Beijing started cracking down on excessive borrowing and rampant speculation in 2020.

The regulatory tightening marked the beginning of financial worries for Evergrande, the former Chinese number one in real estate that is now strangled by huge debt.

Real estate sales have since fallen in many cities and many developers are struggling to survive.

But the government appears to be taking a more conciliatory approach to reviving this key sector.

Measures to promote "stable and healthy" development were announced in November, including credit support for indebted developers and assistance for deferred-payment loans for homebuyers.