What Does 2022 Hold for China’s Economy?
January 28, 2022
About the author:
Christian John Hayward, TI Youth Observer
Long before COVID-19, I remember simply walking along the “Freedom Avenue” in Northeast China’s Changchun city, finding it hard not to be offered an English teaching job or sales role. I never took them as I didn’t want to risk my student visa and future employment, but I do remember thinking that I had made the correct choice doing Chinese studies.
This came to an end in 2020, when China adopted the “zero-COVID” policy in response to the pandemic outbreak. While this has made it hard for foreigners to return to work in China, such policy move was done for good reason. In a similar way to the 2008 financial crisis in the West, China has been spared many of the massive numbers of deaths seen in Europe and North America. As frustrating as it is for foreign graduates such as me, we know that this will be a short period in time and history. One day, China will open up its borders and we can see our old friends again.
That being said, what does 2022 hold for China’s economy? There have been several issues facing the mainland’s economic output. Although China was the only major country to report 2.3% economic growth in 2020, there was a fall in foreign and domestic tourism, followed by a slower than average retail growth of 3.9% in 2021.[1] Meanwhile, consumer prices did rise by 1.6% in urban areas and 1.2% in rural China, showing that worldwide inflation seemed to be a current trend as we continued to struggle with the COVID-19 pandemic,[2] at least in the final quarter of 2021. Accordingly, stability will be a key word defining Beijing’s top priority in terms of its goal for economy.
Given what happened to the Evergrande in 2021, it appears that new affordable housing is one area that the central government will promote in upcoming years. Of course, the fall of the Evergrande did not happen for simple reason. But one thing is indubitable. For years, Chinese individual households have been feeling the burn of the excessively high housing prices. In November 2021, the average property price in Beijing was reported at $6,457.03/sq m[3] whereas the per capita disposable income amounted to approximately $11,822.69.[4] In Shanghai, the number was $5,855.42/sq m[5] vis-à-vis $12,299.53.[6] Among all others, the outrageously high number is probably the most important source of income inequality in China. Access to housing is a key factor that helps explain income disparity,
Thus came this introduction of the common prosperity idea that highlights the importance of better income distribution and more equal opportunities. In an article from the Party journal Qiushi, common prosperity aims at creating a society that comprises a larger majority of people who are middle class, with greater access to education, training, and wealth for all its citizens. A society of common prosperity is olive-shaped, with few on the extremes of poverty and rich. In China, this is planned to be achieved by 2035.[7]
Reining in the wealth divide will become more important for Beijing. So far, the Chinese government has strengthened its law enforcement on public figures. Increasingly, people are seeing celebrities embroiled in high profile tax avoidance being penalized, and wealthy behemoths being affected by sweeping series of regulatory measures that have led to a broad reorienting of China’s economy and society.[8] Once achieved, common prosperity will not only improve the standard of living for more ordinary Chinese but will also set China as a pragmatic example to the rest of the world. This is important as common prosperity is not just a Chinese goal but should be a world goal too.
Current trends are pointing towards a gradual adaptation to a new normal for the Chinese economy, although people-to-people exchanges will still be largely inhibited by the raging pandemic. In 2022, however, there is no doubt that China will continue to focus on domestic output and wealth redistribution to maintain that all important stability.
Looking back on what I took for granted in 2016, I hope, and I believe that the old days will come back, and I will be rolling my eyes again at how many times I am stopped in my stroll. China is a land of vast opportunity and that is why the West has eyed it so closely for the past 200 years. Like all other countries in the world, China’s growth may be slowing down in certain ways, but it is at the forefront of many new approaches in the global economy from reining in big tech to building a more balanced society wealth-wise for all. China’s future is worth waiting for.
[1] “China’s economic outlook for 2022,” CBBC Focus. Jan. 7, 2022
[6] “2021年居民年收入排行榜公布,” 新华报业网.
This article is from the January issue of TI Observer (TIO), which is a monthly publication devoted to bringing China and the rest of the world closer together by facilitating mutual understanding and promoting exchanges of views. If you are interested in knowing more about the January issue, please click here:
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