China’s growth will slow to 5.2% in 2022, moderate monetary policy easing expected

A cargo ship with containers is seen near the Yantian Port in Shenzhen, Guangdong Province, China, May 17, 2020. REUTERS / Martin Pollard / File Photo

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  • China’s GDP growth of 5.2% in 2022, 5.2% in 2023
  • Inflation rate of 2.2% in 2022, 2.1% in 2023
  • saw RRR drop 50 basis points in the first quarter of 2022
  • saw LPR decrease 5 bps in Q1, 5 bps in Q2

BEIJING, Jan 13 (Reuters) – China’s economic growth is likely to slow to 5.2% in 2022 before stabilizing in 2023, as a Reuters poll found the central bank steadily tightened monetary policy easing to stave off a more severe downturn.

Expected growth for 2022 would come in lower than the 5.5% analysts forecast in a Reuters poll in October, underscoring several headwinds facing the world’s second-largest economy from a housing decline, a debt crackdown, tougher pollution measures and more strictly exposed to COVID-19 is curbs that have hit consumption.

According to the median forecasts of 62 economists polled by Reuters, gross domestic product (GDP) is likely to grow 8.0% in 2021, slower than 8.2% in October’s forecast, but still the highest annual growth in a decade.

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Analysts attribute the solid expansion in 2021 in part to the low base in 2020 when the economy was shaken by COVID-19, which first hit China. The subsequent government lockdowns paralyzed activities in large parts of the country.

In the course of the past year, however, the momentum slowed down significantly. GDP grew likely 3.6% year-over-year in the fourth quarter, which would be the slowest pace since the second quarter of 2020, and slowed from 4.9% in July through September, the survey found.

On a quarterly basis, growth in the fourth quarter is expected to increase from 0.2% in July-September to 1.1%, according to the survey.

The government is expected to release 2021 and Q4 GDP data and December activity data on January 17th (0200 GMT).

The Chinese leadership has pledged more support to the slowing economy, which is facing a new challenge with the recent local spread of the highly contagious variant of Omicron.

“To support economic activity, we expect that sufficient political support will be provided, especially in the first half of the year, to ensure that this year’s economic growth does not fall below the comfort level of Beijing,” said Tommy Wu of Oxford Economics in a press release.

China’s heads of state and government are aiming for economic growth of at least 5% in 2022 to curb unemployment, political circles said.


With the New Year expected to start off weakly, the People’s Bank of China (PBOC) is set to announce further easing measures, although it will likely inject more money into the economy instead of cutting rates too aggressively, political insiders and economists said. Continue reading

Over the past year, policy makers have focused on containing real estate and debt risks that exacerbated the economic slowdown. But they have tried to stave off a greater slowdown that could fuel job losses ahead of a major Communist Party congress later this year.

According to the survey, the PBOC is likely to lower banks’ minimum reserve ratios (RRR) by 50 basis points (bps) in the first quarter of 2022.

Analysts expect the PBOC to cut the prime rate on annual loans (LPR), the benchmark interest rate on loans, by 5 basis points in the first quarter, followed by an additional 5 basis points in the second quarter.

The PBOC last cut the RRR – the amount of cash banks must hold in reserve – by 50 basis points on December 15, its second step last year. This was followed on December 20 by lowering the key interest rate for one-year loans (LPR), the reference interest rate, by 5 basis points.

Policy makers have also pledged to step up fiscal support to the economy, accelerate local government issuance of special bonds to stimulate infrastructure investment, and plan further tax cuts.

Consumer inflation is likely to rise from 0.9% in 2021 to 2.2% in 2022 before falling slightly to 2.1% in 2023, the survey found.

(For other stories from Reuters Global Economic Survey: Read More)

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Survey by Vivek Mishra and Devayani Sathyan in Bengaluru, Jing Wang in Shanghai; Reporting by Kevin Yao; Adaptation by Kim Coghill

Our Standards: The Thomson Reuters Trust Principles.

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