Research Briefing | Sep 29, 2022

Covid-19 policy cuts 2022 China cities growth, with 2023 also at risk

The impact of the lockdowns and Covid-19-related restrictions in China were severe in the second quarter of 2022. We have therefore revised down our expectations for growth in 2022 for most of China’s major cities—although we have revised Shanghai and Beijing up slightly. Changsha is forecast to be the best performing major city in 2022. We forecast growth to generally pick up in 2023, but China’s ongoing commitment to the “zero-Covid” containment strategy and the real estate downturn cast shadows on the outlook.

What you will learn:

  • No province is currently on track to meet the national government’s target of “around 5.5%” for annual growth in 2022 and the authorities have notably softened their commitment to it. We forecast average growth of 2.1% in 2022 for China’s 15 major cities.
  • We forecast that city GDP growth will pick up next year. But the outlook for consumer-related sectors will remain fragile for China’s major cities, so long as the government’s hard-line approach to tackling coronavirus outbreaks remains in place.
  • The real estate downturn also poses a significant threat to most cities across China over the shortterm, as confidence in that sector plummets. Real estate activity has already been hit because of tanking property sales in recent months.
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