Hopping And Splashing

Image source: HstrongART, Peace-loving Shutterstock

What's going on?

Data out on Tuesday showed that Chinas economy expanded by 3% in 2022 the slowest rate of growth, excluding the pandemic years, for nearly half a century.

What does this mean?

Spending most of 2022 cooped up in lockdowns meant that China was always going to have a tough time hitting its ambitious growth target of 5.5%. And let’s face it, the 3% that the country did achieve is pretty glacial by its own track record (tweet this). In fact, last years growth marked the first time in decades that the world as a whole outpaced Chinas economic performance. But its not a total sob story: the country had a bit more pep in its step as the year drew to a close, and the fourth quarters growth actually outstripped economists predictions. So sure, Covids still a nuisance in China, but this weekend ushers in the year of the water rabbit, supposedly bringing patience and prosperity so the country just might have luck on its side.

Why should I care?

Zooming out: See-saw.
Now that Chinas reopening, there’s one worry niggling at economists minds: whether this move will help or hinder the fight against inflation. See, some experts think that a reopened, re-invigorated China will be extra-thirsty for resources like oil, sending prices skyward. But others point out that an unfettered China could lead to unclogged supply chains and free-flowing goods, easing price pressures instead. Time will tell which factor packs a bigger punch

The bigger picture: Baby bust.
China’s one-child policy was scrapped in 2016, so you might expect the birth rate to be booming especially given the boredom and pent-up energy that lockdowns entail. But China’s population actually fell for the first time in 60 years in 2022, and thats a problem. Just ask Japan: now labeled the land of the setting sun, its slipping population has held economic growth back for a generation. Maybe its time for a three-child policy.

Originally posted as part of the Finimize daily email.

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