Warning of Economic Recession Next Year Due to Worsening Key Indicators
Insiders Optimistic About "Overall Improvement"
[Asia Economy Beijing=Special Correspondent Kim Hyunjung] Amid warnings that economic activity will stagnate due to the nationwide COVID-19 outbreak in China, optimistic forecasts expecting a strong rebound next year are emerging within the country.
On the 25th (local time), Bloomberg News reported that official indicators such as retail sales, housing, and automobile sales have worsened, along with decreased mobility, stating that "the burden on China's economy is increasing due to the COVID tsunami." Bloomberg noted, "Economic activity, already weakened in November, further stagnated due to the surge in cases in December," adding, "The outlook for the new year is bleak."
In particular, Bloomberg emphasized that while China's retail sales decreased by 5.9% year-on-year, the decline in Beijing last month was nearly three times greater at 17.6%, and despite the authorities' easing of lockdown guidelines, business activities such as stores and restaurants have not recovered at all. According to BloombergNEF, as of the 22nd, the number of subway rides in Beijing was 3.6 million, only 30% of the same day in 2019 before the COVID-19 spread.
Industrial activity also showed notable weakness. According to data compiled by Bloomberg, China's real estate sales decreased by 37.1% year-on-year as of this month, and automobile sales fell by 25.9%. Steel production also declined by 3.4% compared to the end of November as of the 20th.
On the other hand, optimistic voices are emerging in China that the economy will rebound sharply next year. Ning Jizhe, former Deputy Director of the National Development and Reform Commission, forecasted at the China Asset Management 50 Forum on the 25th that "following the implementation of pro-growth policies set by the Central Economic Work Conference, sectors such as the digital economy and green economy will show new trends and promote the recovery of the real economy."
Yin Yanlin, Deputy Director of the Central Financial and Economic Affairs Commission Office, also said at the same event, "China's economy has passed its most difficult period," and predicted, "Despite an uncertain environment, there will be overall improvement next year." Deputy Director Yin added, "The strong will of the Chinese people for a better life will be the driving force and vitality to promote economic development," and "The progress toward modernization will not stop." Additionally, former Finance Minister Luo Jiwei called for setting next year's gross domestic product (GDP) growth target at over 5% and urged for effective and proactive fiscal policies.
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