‘Bottoming out’: China dealt economic blow as zero Covid-19 strategy backfires

China hasn’t experienced this for the past 30 years – and its strict Covid-19 stance is to blame.

The coronavirus pandemic has dealt China a massive economic blow which will see its GDP growth “bottom out” at the end of the year.

Meanwhile, other nations who have not pursued a “zero Covid” strategy will see their financial growth soar for the rest of the year.

In its global economic outlook for 2022, Japanese financial firm Nomura delivered a dire forecast for China but was optimistic about other countries in the G20.

For the first time in almost two decades, the US is set to overtake China for having the fastest growing economy after a difficult year for the Asian superpower.

The communist nation is going to expand its economy by 4.3 per cent this year, according to the figures, while the US GDP is going to jump by 4.6 per cent.

While it might not seem like much of a difference, that’s a huge change considering China’s standards for the past 30 years, where its year on year growth has never dipped below 6 per cent. In fact, last year China experienced a 7.8 per cent GDP boom.

“The worst is yet to come,” the report’s authors warned for China, who attributed the drop to the Evergrande crisis and China’s determination to eliminate Covid-19 in society.

China scored poorly compared to other countries, its worst performance in 30 years.

The report’s authors blamed the ongoing Covid-19 pandemic and the flailing property giant Evergrande for the sudden change in China’s fortunes.

China’s pursuit of zero Covid-19 cases in society has seen its economy stagnate.

At times, Chinese authorities have been so determined in their elimination stance that citizens have had their doors welded shut to stop them going outside if they have the possibility of being Covid-positive.

The 13 million residents in the city of Xi’an are currently experiencing a lockdown hailed the harshest in the world, where they are not even allowed outside for essential reasons, since December 23.

There are reports that locals are trading cigarettes and expensive gadgets for groceries over starvation fears.

People cross a road in Xi'an in China's northern Shaanxi province on December 31, 2021, amid a Covid-19 coronavirus lockdown. Picture: AFP

The pandemic has also stalled China’s manufacturing and export capabilities due to supply chain issues and shipping delays – another blow to their economic prosperity.

At the same time, Evergrande earned the unwelcome title of the world’s most indebted real estate firm after racking up staggering debts of around $A408 billion.

“We expect growth to weaken further in spring 2022 on a worsening property sector, rising costs of the zero-Covid strategy, an export downturn and widespread factory closures before and during the Winter Olympics,” the report noted.

“We expect Beijing to take more decisive action to arrest the downward spiral in spring 2022, and growth could bottom out after that.”

For the first three months of this year, China’s growth is expected to crawl to just 2.9 per cent. The next quarter would see only a marginal uplift of 3.8 per cent.

Chinese lockdown rule-breakers are publicly shamed and paraded through the streets.

They carry placards with their name and photo in Cultural Revolution-style disciplinary measures.

Australia didn’t have a particularly inspiring economic forecast, either.

In 2021, our economy rose by 4.2 per cent. It’s expected to grow much less this year, only by 3.7 per cent, according to the report.

NSW and Victoria abandoned their Covid zero policy last year.

Other states are now following suit.

While NSW and Victoria were in their extended lockdowns in 2021 for 106 days and 70 days respectively, it was estimated their economies were bleeding $1 billion every week, each.

Chinese President Xi Jinping has kept Covid-19 largely at bay in the country but at a huge economic cost. Picture: Fred/Dufour/AFP

A few surprising countries took out the top spots on the scale of expected GDP growth for this year, booting out China from its number one rank.

While the US GDP is predicted to grow by 4.6 per cent, other countries also stole the spotlight.

India’s economy will grow by a whopping 8.5 per cent for this year, and Malaysia is slated for a 7 per cent rise.

Other countries are also beating the global superpower in terms of year-on-year growth with the Philippines up by 6.5 per cent, Hungary at 5 per cent and Poland at 4.8 per cent.

Other notable countries all above China’s threshold include Singapore and Taiwan (both on 4.7 per cent), Romania (4.6 per cent) and Indonesia, Israel and the Czech Republic (all at 4.4 per cent).

China's President Xi Jinping with a face mask is displayed as people visit an exhibition about China’s fight against Covid-19 coronavirus. Picture: Nicolas Asfouri/AFP

However, the economic success of these countries doesn’t always take into account the human toll of the Covid-19 pandemic.

From a sheer numbers point of view, abandoning the Covid-zero strategy has had dire impacts on death rates.

The US is topping the world in terms of Covid-19 deaths with 828,000 deaths in a population of 331 million, according to Our World in Data.

China, on the other hand, has the biggest population in the world of 1.4 billion people, yet they aren’t even in the top 10 for most number of Covid-related deaths (if their figures can be believed).