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Asia Has Rebounded But China Has ‘Lost Momentum’: World Bank

Covid restrictions have disrupted China’s supply chains, industrial and services production, domestic sales and exports, the World Bank said

Russia has largely been ostracised from global markets due to its invasion of Ukraine. Now western fund managers are worried that China's economy could suffer the same fate.
People in Beijing get their health codes scanned during a Covid-19 outbreak in in June. Restrictions caused by the Covid pandemic have been a major disruption to business in China. File photo: Reuters.


China’s growth forecasts were slashed by the World Bank on Tuesday, as they were predicted to fall behind their Asia-Pacific neighbours for the first time since 1990.

China is set for GDP growth of 2.8% for 2022, the bank said, with the Asia-Pacific region predicted to grow 5.3% on average.

“China has lost momentum,” said the World Bank’s biannual report. “It has continued its zero-Covid approach, using mass testing and targeted mobility restrictions to contain outbreaks of the disease.”


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Covid lockdowns in Shanghai in April reduced exports, impacted retail sales, curbed industrial production and sparked a decline in the Purchasing Manager Index (PMI), the report showed.

“These restrictions disrupt supply chains, industrial and services production, domestic sales and exports,” the report went on.

Further measures were imposed last month, with 21 million citizens in southwestern Chengdu locked down for at least two weeks.


Real Estate Turmoil

Debt distress after the pandemic and rising interest rates has put pressure on all Asian government finances and threatens to weaken currencies further, the World Bank warned.

“China’s real estate sector turmoil is an example of pre-existing difficulties that are accentuated by financial tightening, though the direct exposure of systemically important banks to property sector loans is limited,” it said.

The country’s property sector makes up a quarter of its GDP, with home prices, sales and investment all slumping further in August.

A major economic leadership reshuffle is expected at China’s twice-a-decade Party Congress in October, with policy veteran Li Keqiang due to step down as manager of the economy and banking regulator Lui He also due to retire.

Investors have cut their exposure to China in anticipation of the event. Xi Xinping looks set to win a third five-year term, with more loyalists likely to be appointed to top positions.


  • By Alfie Habershon


Read more:

Investors Cut Exposure to Chinese Assets as Congress Looms

China Congress to Choose Stimulus Over Reform As Economy Slows



Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.


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