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SHENZHEN, China, Jan. 6, 2022 /PRNewswire=KYODO JBN/ --

China's GDP growth rate in 2021 is likely to be 8%, with a projected 3.7%

growth in Q4, according to a report recently released by Peking University,

HSBC Business School (PHBS) Think Tank. Although China was the only major

economy to record growth in 2020, it has been dealing with multiple challenges

to its expansion in 2021, and the real economy remains sluggish, says the

report.

PHBS Think Tank sees that the downward pressure on China's real economy is

still high in the fourth quarter, pointing to weak consumption, a significant

decline of investment in infrastructure and real estate, and CPI upward

pressure. Since the prices of some upstream raw materials are still at high

levels, the rise in the prices has begun to be transmitted to the middle and

downstream products.

Due to triple pressure from demand contraction, supply shocks, and weakening

expectations, China's annual GDP growth rate is expected to be 5.0% in 2022,

according to PHBS Think Tank. The slowdown in the property market and

consumption is expected to continue acting as headwinds to the growth of the

world's second largest economy. Based on its DSGE model, the Think Tank

estimates that a 10% decline in real estate investment will lead to a 2.1%

decrease in GDP growth, causing the loss of 6.85 million jobs in the related

sectors.

As the omicron variant, persistent supply chain disruptions, and inflation

pressures are constraining the global economy's recovery from the pandemic,

some of the factors supporting China's exports are expected to be weakened in

2022. The report includes the forecast results that the contribution to China's

GDP from consumption, investment, and net export will be 1.9 percentage points,

1.7 percentage points, and 1.4 percentage points, respectively.

PHBS Think Tank suggests that more proactive policies need to be implemented in

2022. It advises that the government strengthens the fiscal policy to increase

domestic consumption and infrastructure investment and ensure the supply of

upstream raw materials. Furthermore, the report concludes that effective

policies for loan granting and financing are needed to avoid the hard landing

of the real estate industry.

SOURCE: Peking University HSBC Business School