City skyline in China

China GDP Q4 2022

China: Economic growth slows in Q4

GDP growth waned to 2.9% year on year in the fourth quarter from 3.9% in the third quarter, broadly in line with our panelists’ expectations.

The services sector grew 2.3% annually in the fourth quarter, decelerating from the third quarter’s 3.2% increase. In addition, the industrial sector lost steam, growing 3.4% in Q4 (Q3: +5.2% yoy). Both the services and industrial sectors were weighed on by tightening restrictions in October and November—lockdowns reportedly affected areas worth a quarter of China’s GDP by end-November. The sudden shift to living with Covid-19 then led to an explosion of virus cases which disrupted activity in December. That said, the economy held up better than forecast at the end of the quarter: Industrial production rose 1.3%, retail sales declined 1.8%, and fixed investment increased 5.1% in December in annual terms, beating market expectations. Finally, agricultural sector growth picked up to 4.0% in Q4, from the 3.4% expansion in the prior quarter.

On a seasonally adjusted quarter-on-quarter basis, economic activity was flat in Q4 compared to Q3, down from the previous period’s 3.9% expansion.

Looking forward, the Consensus is for year-on-year GDP growth to be downbeat in Q1 as external demand ebbs and the pandemic dampens activity at the outset of the quarter. Moreover, vehicle sales will likely decline following the expiration of a vehicle tax cut in December. That said, with Covid-19 cases peaking in late December and early January, a meaningful pick-up in momentum is likely after the Lunar New Year festivities.

On the outlook, Nomura analysts said:

“We still caution that the pace of the recovery should not be overstated, in view of likely modest pent-up demand, a deteriorating export sector, long-term issues in the property sector and payback effects from auto stimulus.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen