What to expect in China in 2022

2022 will be a year of slower growth in China as the property and export sectors weaken and structural constraints loom larger. A desire to keep a grip on credit risks will inhibit the policy response to the slowdown. Xi Jinping’s decision not to step aside when his second term as Party leader ends will cement China’s shift to a more autocratic style of policymaking, with productivity growth likely to decelerate further as a result. And 2022 may be the year in which China’s population starts to go into decline.
Mark Williams Chief Asia Economist
Continue reading

More from China

China Economic Outlook

Cyclical trough, tepid rebound

China will be buffeted in the first half of 2022 by COVID outbreaks and a further slowdown in property construction. Policy support should improve the picture later in the year, but mounting structural headwinds will limit the extent of any rebound. Drop-In (08:00 GMT/16:00 HKT, 27th Jan): China Outlook – Cyclical trough, tepid rebound. Join Mark Williams and Julian Evans-Pritchard for a discussion about China’s economic and policy outlook this year. Register here.

26 January 2022

China Activity Monitor

Starting 2022 on the back foot

Our China Activity Proxy (CAP) suggests that China’s economy was still struggling to regain momentum at the end of last year amid troubles in the property sector and recurrent COVID outbreaks which continue to depress service sector activity. We think these headwinds will continue to hold back activity during the first half of this year.

24 January 2022

China Economics Weekly

Some relief for property developers

This week’s cut to policy rates is one of a succession of recent moves designed to stabilize residential property sales. Developers have also been given a little more breathing room in terms of their access to financing. These steps may not feed into a recovery in project starts, given the poor structural outlook for property demand. But they improve the immediate outlook for many developers. Meanwhile, Tianjin’s Omicron outbreak appears to be under control and COVID cases nationally have dropped to a two-month low. That appears to be encouraging slightly more people to make the trip home for Lunar New Year than a year ago. We’ll be discussing our expectations for policy, zero-COVID and the economy on Thursday (08:00 GMT/16:00 HKT) in an online briefing timed to coincide with publication of our next Outlook report. Please register here to join us and let us know in advance of any questions you’d like us to address.  

21 January 2022

More from Mark Williams

China Chart Book

The People’s Bank is not pleased

The People’s Bank purchased nearly $6bn in foreign exchange last month, by our estimate. That’s not much in the context of China’s cross-border trade and investment flows. But it was the biggest purchase in six years. Then, earlier this month, while cutting the reserve requirement applied to renminbi-denominated deposits, the PBOC raised the reserve requirement for foreign currency accounts. That is likely to have prompted a transfer of close to $20bn in foreign exchange from commercial banks to the central bank. Both moves are overt signals that the PBOC is unhappy with the strength of the renminbi. In recent years, the PBOC has hidden its interventions: the breakdown of the previously-tight relationship between banking system net FX settlement and PBOC net FX purchases suggests that some other entity was intervening on the PBOC’s behalf. Now though, the PBOC appears to want its efforts to stem the renminbi’s strength to be known. We think it will get its way, and expect the renminbi to weaken from 6.37/$ now to 6.90/$ at the end of next year.

22 December 2021

China Activity Monitor

Virus disruption compounding property strains

China’s economy started 2021 above its pre-pandemic path of output, thanks to stimulus and surging global export demand. Our China Activity Proxy (CAP) suggests that the economy is ending the year well below the pre-pandemic path as a boom in construction activity has gone into reverse and small but recurrent COVID outbreaks continue to depress service sector activity. These headwinds will continue into 2022.

20 December 2021

China Economics Update

Easing cycle has further to run

The People’s Bank has taken another modest easing step with a 5bp reduction to the One-Year Loan Prime Rate, although it kept the Five-Year rate on hold. We expect more easing to follow in the coming months.

20 December 2021
↑ Back to top