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China’s recovery from Covid pushed up its GDP growth to 8.1% last year, but not every sector did so well. The expansion slowed significantly in the fourth quarter, highlighting the pressure on the economy from a lingering real estate crisis, Beijing’s tough “zero-Covid” strategy and the raging omicron variant.
Featuring rapid replication and less obvious symptoms, the highly contagious omicron variant of Covid-19 has posed huge challenges for Beijing as it gears up for the Winter Olympics, which are set to begin on Feb. 4.
Another topic that has captured global attention, especially in investment circles, is China’s new rules for overseas IPOs, including those regarding the VIE structure and cybersecurity reviews. Caixin Global has produced a series of articles to give you a deep dive into the topic.
Looking forward, overseas investors need to take notice of a longer-term issue: the demographic challenge faced by the world’s second-largest economy. China’s declining birthrate has been worrisome for a while, hitting the lowest since 1949 last year despite government efforts to encourage more births. Will this trend turn into a demographic crisis in the end? Only time will tell.
# GDP #
Five Things to Know About China’s Plan to Stabilize Growth in 2022
Stabilizing economic growth has reemerged as the top priority of China’s policymakers, as the world’s second-largest economy’s initial rapid recovery from Covid-19 flames out.
“Economic growth is the biggest challenge of 2022,” said Yang Weimin, a top economic advisor. Economists expect growth to continue to moderate in the fourth quarter of 2021 from the 4.9% year-on-year pace in the July-September period — the weakest in a year. In 2022, the annual growth rate is expected to fall below 6% or even 5.5%, compared with an expected rate of around 8% in 2021.
China’s 2021 GDP Grows 8.1% on Low Base
China’s GDP grew 8.1% in 2021 as the economy’s rapid recovery faded in the second half of the year amid power shortages and turmoil in the real estate sector, official data showed.
The annual growth figure easily met the government’s target of “above 6%” that was set in March. However, this was partly thanks to a low comparison base in 2020, when the economy was disrupted by Covid-19 and grew by a mere 2.2%.
China Sets Five-Year Targets to Boost Digital Economy
China has released a five-year plan for developing digital economy with specific targets and tasks, aiming to boost the contribution of core digital economy industries to 10% of GDP by 2025.
The plan was released by the State Council, China’s cabinet. It defines the digital economy as a form of economic activity in which the key factor of production is data resources, the main carrier is the modern information network, and the principal driving force is the integration of information and communication technology as well as the digital transformation of all factors of production.
# VIE #
Caixin Explains: What China’s Overhaul of Overseas IPO Rules Is All About
The turmoil that followed Didi Global Inc.’s $4.4 billion listing on the New York Stock Exchange last year was not only unprecedented, but may also prove to be the final straw for listings of Chinese mainland companies in U.S. equity markets.
Within days of its June 30 debut, the Chinese ride-hailing giant faced a devastating backlash from China’s internet watchdogs. The company, which had pushed through its New York IPO in spite of misgivings and potential risks flagged by domestic regulators, was forced to undergo a cybersecurity review, remove its apps from domestic app stores, and suspend new user registrations.
China’s New Rules on Overseas IPOs Could Make Life Tougher for Foreign Advisors
Foreign financial intermediaries that manage overseas share sales of Chinese mainland companies could face tougher compliance challenges under a proposed new regulatory framework that will increase registration and paperwork requirements.
Draft rules unveiled by the China Securities Regulatory Commission (CSRC) on Dec. 24 will require the firms to file with the securities regulator within 10 working days “after the first engagement of such business.” Such firms include investment banks that sponsor or act as lead underwriters for a domestic company’s overseas securities offering and listing.
# Omicron #
Cover Story: China in Hand-to-Hand Combat With Omicron
In less than two months since it was first reported, the highly contagious omicron variant of Covid-19 is storming the world, driving record-breaking case counts in the U.S. and Europe while breaking through heavily guarded borders elsewhere, including China.
On Jan. 15, Beijing reported the capital city’s first case of omicron, less than a week after the neighboring port city of Tianjin detected the country’s first local infection of the mutation. At least six cities and provinces, including Shanghai, Henan, Liaoning and Guangdong, have confirmed more than 300 omicron infections, indicating a spread even as the country maintains one of the world’s most stringent virus control regimes.
Cover Story: Beijing Gears Up for Winter Olympics Amid Omicron Threat
In two weeks, Beijing will become the first city in more than 120 years of modern Olympic history to host both summer and winter games. Beijing was the site of the Summer Olympics in 2008 and is gearing up for the winter games starting Feb. 4.
Even after the successful 2008 summer games, Beijing faces unprecedented challenges as the rapidly spreading omicron variant of Covid-19 breaks through China’s “Covid Zero” strategy.
Caixin Explains: Why Omicron Is Taking Over the World
Two years into the pandemic, humanity has been racing against the fast-evolving virus as a number of variants have emerged, prevailed and added complexity to an unprecedented battle.
The rise of the omicron variant is making the fight against Covid-19 more challenging because it has shown much higher infectiousness than any previous variant.
Related
Cover Story: The Dangling Sword of Omicron
# Birthrate #
China’s Record Low Birthrate Heightens Long-Term Economic Challenges
China’s birthrate hit a new record low last year, official data showed, adding to concerns that the world’s second-largest economy will slow faster than previously expected.
The world’s most populous country had 10.62 million babies born last year, a birth rate of 7.52 per 1,000 people, according to data from the National Bureau of Statistics (NBS). The birthrate was the lowest since the founding of the People’s Republic of China in 1949.
Dwindling Number of Childbearing-Age Women Worsening China’s Birthrate Slump, Official Says
The declining number of women of childbearing age, especially those aged 20 to 34, is a major factor contributing to China’s flagging birthrates, a health official said, after data showed the birthrate hit a record low in 2021.
Yang Jinrui, deputy director of the National Health Commission’s population surveillance and family development department, said at a press conference that the number of women in the 20-34 age group decreased by an average of 3.4 million per year from 2016 to 2020, and the decline reached 4.73 million in 2021 compared to 2020.
Related
Cover Story: The Challenge of Keeping China From Shrinking
# Michelin #
How Michelin Learned to Savor Chinese Cuisine
The holiday season always focuses the mind on good food. Which means that the world-famous Michelin Guide’s latest China edition, published on Nov. 12, has come out at an opportune moment.
A total of 37 restaurants across China were given a one-star rating, eight were awarded two stars and two received the prized three-star rating that comes with the recommendation, “Exceptional cuisine, worth a special journey.”
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