President Xi Jinping said tough challenges remain in China’s fight against COVID-19, and has been silent for weeks about reorienting policies on the virus that has infected hundreds of millions and severely hit economic activity. He later acknowledged the divisions in society that led to spontaneous protests on rare occasions.
In his New Year’s address on Saturday, Xi said the country was in a new phase of COVID control and adapted according to a science-based and targeted approach. The day before, he said the country’s strategy was “optimized to protect people’s lives and minimize economic costs.”
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On December 7, the government took decisive steps to ease away from its strict zero-tolerance approach to containing COVID-19. This included snap lockdowns, frequent mass inspections and most border closures. Xi has repeatedly defended the strategy despite mounting economic costs until mid-October.
But on Saturday, China’s leaders addressed the hardships endured by their people during the draconian lockdown and the rapid spread of COVID.
“Since the outbreak of COVID-19, we have always put people first and life first,” Xi said. “Through extraordinary efforts, we have overcome unprecedented difficulties and challenges, and it has not been an easy journey for anyone. is inside.”
The president was touting his achievements when he won a third term at the Communist Party Congress in October. But less than a month after him, his government faced the most widespread protests in decades as public anger boiled over his COVID-Zero strategy.
Without directly referring to the protests, Xi said in his speech that it was “natural” that the country’s 1.4 billion people had different concerns and views on some issues.
“The key is to build consensus through communication and consultation,” he said.
In addition to repeated COVID outbreaks, China’s economy was disrupted in 2022 by persistent property market weakness, weak consumer demand, and declining foreign demand for Chinese products.
Mr. Xi’s telecast came after data earlier in the day showed economic activity in December contracted the most from the previous month since February 2020.
Home sales remained weak in December, with a report out this week expecting further pressure on manufacturing and services.
Analysts expect growth to slow to 3% in 2022, but Xi said China’s gross domestic product topped 120 trillion yuan ($17.4 trillion) last year, boosting the economy by at least 4.4%. It suggests that
“The Chinese economy is very resilient, has great potential and vitality,” Xi said. “The fundamentals that sustain long-term growth remain strong.”
Economists see an increasing likelihood of a faster and stronger recovery in the second half of 2023. After a slow start in January-March, growth this year is expected to bounce back to 4.8%, according to the median estimate of economists surveyed. by Bloomberg.
Guotai Junnan International chief economist Hao Zhou said in a report on Saturday, referring to the manufacturing PMI data for December, that “given the uncertainty of the virus over the past month, analysts have made a reasonable “It’s really hard to give a forecast,” he said.
“Beyond these sentiment figures, we believe investors should pay attention to high-frequency economic activity data that provide a measure of post-pandemic recovery.”
China now says it has thousands of new infections a day. But the government’s top health official estimates that in his first 20 days in December, he infected 248 million people, or nearly 18% of her population, with the virus. As a result, hospital emergency rooms and crematoria were overwhelmed.
COVID-19 could kill as many as 25,000 people a day in January, according to Airfinity, a London-based research firm focused on predictive health analytics.
“Light of hope”
“Perseverance and solidarity mean victory, so let’s make a special effort to overcome it,” Xi said of the battle against the virus, adding that “a glimmer of hope is in front of us.”
Xi has bet that this year’s economic recovery will help weather the shock, with officials at a recent meeting of the 24-member Politburo to revive consumption and support the private sector. I swore that
China’s central bank pledged on Friday to support domestic demand and maintain “effective” growth in credit. The People’s Bank of China said monetary policy would focus on “growth, employment and price stability” to help boost domestic demand.
The PBOC reiterated that it would provide strong support to the real economy, keep prices basically stable, and step up targeted stimulus to key sectors and industries hit by the pandemic. It also said it would meet the rational financing needs of the real estate industry and drive mergers and acquisitions in the sector.
“The economy will face a tough period in the coming months as the number of infections surges before we can fully reopen,” said David Koo of Bloomberg Economics. The first wave has peaked. “It will most likely be later in late February or March.”
“This data supports our view that the People’s Bank of China is likely to cut rates in the first quarter, likely to help stabilize the economy, and provide further policy support,” he said. I was.
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Xi calls for unity as China enters ‘new phase’ of COVID-19 policy
