Despite the US economy’s rising interest rate and sharp contraction, with a looming worst-case scenario of a full-fledged recession, its counterpart, and the world’s second-biggest economy, China, is expected to grow at a slower pace this year. For the first time since 1976, where the sleeping giant woke up and decided to go all-in with globalization amidst the ongoing cultural revolution and aimed to show that a communist nation can stand toe-to-toe with democracies around the world.

Bloomberg Economics, a prominent publication released its economic report, which estimates that the world’s largest economy, China, will only grow by around 2% this year, falling short of the US’ projected economic growth of 2.8%.

Lead Up to the Historic Year of 2022

Starting January of this year, US President Joe Biden has already claimed that the US economy will outpace its counterpart and fierce rival, China. In a statement, Biden said, “For the first time in 20 years, our economy grew faster than China’s.” He made this remark following the January Gross Domestic Product (GDP) data that was released by the US.

According to the publication, “Measuring the fourth quarter of last year compared with the same period of 2020, the US expanded 5.5% against China’s 4%.” It added that a jump in inventories boosted the US economic growth in the final three months of last year.

The Effect of China’s 2022 Mass Lockdowns

The COVID-19 pandemic has remained the main contributor to China’s sluggish growth for the past two years. The creeping aftermath effect of the pandemic and President Xi Jinping’s aggressive “COVID-19 Zero Policy” resulted in mass lockdowns from late 2021 until today in key cities and provinces in China caused by painstakingly repeating outbreaks throughout the country ultimately brought its economic growth to stall. Despite China’s best efforts to curve this economic slowdown by utilizing its monetary, fiscal, and regulatory measures to adapt to the crisis.

The 2% economic growth outlook is a far cry from the Chinese Government’s optimistic goal of 5.5%. The publication added, “even in an upside scenario, with an unlikely relaxation of the Covid-zero stance, a 5% expansion – let alone the government’s 5.5% target – looks out of reach.”

Meanwhile, Citigroup, Inc., a multinational Investment Bank, offers a more hopeful stance saying in a note: “China still has policy options. [However] At this juncture, a timely and decisive rollout of real stimulus measures is critical to bring growth back on track.”

Chinese Government Stepping Up

Wall Street Journal reported that the Chinese President Xi Jinping has ordered its key Government officials to do all necessary actions to “ensure China’s growth outpaces the US this year.”

Furthermore, China’s Vice Premier, Liu He, hinted that the country might be softening its stringent regulations and restrictions on numerous Chinese technology firms to help in the government’s effort to boost its economy. Additionally, the publication stated that “Policymakers indeed have repeatedly rolled out pledges of more growth-friendly measures.” However, it concluded that “the announcements have fallen short of any specific, large-scale fiscal package or decisive across-the-board monetary easing, leaving economists and investors unimpressed.”