Gross Domestic Product growth and 2022 forecast
According to the recently released economic statistics by the National Bureau of Statistics and the Ministry of Commerce, China’s first quarter (Q1 2022) growth exceeded expectations, with an increase of gross domestic product (GDP) by 4.8 percent, above market forecasts of 4.4 percent. Despite new domestic COVID-19 lockdowns and unanticipated geopolitical events, China’s authorities remain optimistic as the country’s high-tech industries and green economy continue to show robustness. New policy interventions also facilitate market openings and raising efficiencies to attract foreign investors.
However, amid widespread COVID-19 lockdowns, a prolonged downturn in the property sector, as well as geopolitical pressures such as the uncertainty from the Russia- Ukraine conflict, has heightened the risk for a slowdown. Corroborating these risk factors, retail sales data for March 2022 revealed that retail sales fell 3.5 percent YoY, down for the first time since July 2020.
For 2022, China is targeting a 5.5 percent economic as headwinds gather- slowing from a 8.1 percent growth last year, matching IMF 2021 forecasts for China, and after a 2.2 percent growth in 2020.
China’s GDP growth contracted by 6.8 percent year-on-year in Q1 2020. However, it bounced back to a growth rate of 3.2 percent in Q2 and 4.9 percent in Q3. And in Q4, China’s GDP rose by 6.5 percent year-on-year from October to December 2020, returning the economy to its pre-pandemic levels. As compared to the estimated 3.5 percent contraction of global economy, China’s GDP grow by 2.3 percent in 2020, reaching RMB 10159.86 trillion (US$1571.73 trillion).
Foreign Direct Investment trends
With rebounding confidence in China’s growth and opening-up, it remains the top FDI destination for foreign investors with growing inflow of foreign direct investment (FDI) by 25.6 percent in Q1 of 2022 YoY.
Mainland China attracted RMB 379.87 billion (US$59.66 billion) in foreign direct investment (FDI), excluding foreign investment in banking, insurance, and securities. The Ministry of Commerce (MOFCOM) described this as a “stable beginning” for the year. China’s FDI inflow has continued to see an upward tick, shunning the negative effect of the COVID-19 pandemic.
According to the State Administration for Market Regulation, there were 10,000 new foreign-invested enterprises newly established in China in the first quarter.
In 2021, China’s actual use of FDI hit RMB 1.149 trillion, representing a 14.9 percent surge from the previous year. In US dollar terms, the FDI inflows came in at US$173.48 billion, up 20.2 percent year on year, according to the Ministry of Commerce (MOFCOM).
For comparison, in the COVID-ravaged year of 2020, FDI into Chinese mainland stood at RMB 1.034 trillion, up 7.4 percent year-on-year. In US dollar terms, it totaled US$149.34 billion, up by 5.7 percent, according to the Statistical Bulletin of FDI in China released by MOFCOM in November 2021.
The robust double-digit growth last year is considered remarkable on a relatively high base in 2020 – China registered positive growth of 5.7 percent at a time when global FDI plunged 34.7 percent.
As to the number of foreign-invested enterprises (FIEs), about 48,000 were registered in 2021, up 23.5 percent year on year. This continues the recovery from a slump in 2019 that saw the figure drop to 40,910 from 60,560 in 2018.
China’s export statistics
China’s imports and exports continue to grow, despite the unprecedented disruption to the global economy caused by the COVID-19 pandemic and international trade contributes a considerable share to China's overall economy.
[tips title="Did You Know"]China’s overall foreign trade increased by 10.1 percent in January-April 2022, approximately USD 1.98 trillion in dollar terms.[/tips]
China’s trade surplus surged to USD 51.12 billion in April 2022, up from USD 40.89 billion in the same month a year earlier, topping market forecasts of USD 50.65 billion. It was the largest trade surplus since January, as exports rose while imports were unmoved. Export increased by 3.9 percent YoY; the first single-digit growth in the last year and a half and the slowest increase in nearly two years; while imports were flat, in the midst of ongoing COVID-19 curbs in important regional hubs.
In June 2021, China’s exports increased by 32.2 percent year-on-year, up from 27.9 percent in May 2021. In US dollar terms, exports were worth US$ 281.4 billion. By the end of 2021, China’s total exports reached US$ 3.36 trillion, representing a 29.9 percent increase compared with 2020.
In 2020, China’s exports increased by 3.6 percent for a total of US$2.59 trillion, making it responsible for about 15 percent of global exports. The previous year, in 2019, China’s exports increased by just 0.5 percent.
This growth came despite diminished demand from a global economic downturn, and logistical trade constrains caused by the pandemic. China’s biggest export partners in 2020 were the US (US$46.5 billion), Hong Kong (US$34.3 billion), Japan (US$13.4 billion), Vietnam (US$13 billion), and South Korea (US$11.7 billion).
China’s import statistics
China increased to 0.01 percent in April after an unexpected drop of 0.1 percent YoY to US$ 228.7 billion in March 2022, missing market forecasts of an 8 percent increase, and after a 15.5 percent increase in the first two months of the year. It was the first drop in consignments since August 2020, as COVID-19 curbs across large parts of the country impeded transportation and weakened demand.
In June 2021, China’s imports grew by 36.7 percent YoY, down from 51.1 percent the month before - imports were worth US$229.9 billion in dollar terms. However, by the end of 2021, China's imports increased by 30.1 % to $2.69 trillion.
In 2020, China’s imports were valued at approximately 2.06 trillion U.S. dollars’ worth of goods. This indicated a decrease in import value by about one percent compared to the previous year. However, in October 2021, the accumulated value of imports to China amounted to around 215.68 billion U.S. dollars – which is an approximate 20 percent uptick in import value compared to the same period in 2020.