By the end of 2022, China’s economy faced a stark slowdown, dipping to levels not seen since the early days of the pandemic in 2020. Analysts point to the government’s decision to move away from a strict zero-Covid approach as a central driver of this downturn, with the Bloomberg agency citing data from the National Bureau of Statistics that underscore a broad deceleration across multiple sectors.
Official indicators show that the abrupt shift away from zero-Covid measures triggered a pullback in economic activity, especially in services where consumer demand and activity were most affected. The manufacturing sector also slowed visibly. The official manufacturing purchasing managers index slipped to 47 in the latest reading, down from 48 in November, and came in below Bloomberg’s economists’ expectations of 47.8. This drop signals contraction for durable goods, supply chain adjustments, and a cooling of business investment in the wake of policy changes.
Reports describe how the spread of the virus within major urban centers led many residents to limit movement and social interaction, with knock-on effects for retail, hospitality, logistics, and other service-oriented industries. As a result, several firms faced the risk of closure or operated under tighter margins as demand trends shifted and capacity utilization fell. The broader picture suggests that activity did not only fade in manufacturing but also contracted in non-manufacturing areas widely seen as barometers for the economy’s service and construction activity.
The non-manufacturing index, which tracks construction activity and services output, declined to 41.6 in December from 46.7 in November, undershooting forecasts that averaged around 45. The Services PMI, a sub-index that captures the health of the service sector, dropped to 39.4 from 45.1 in November, marking the lowest point since February 2020 and continuing a four-month sequence of decline. These readings collectively reflect how consumer sentiment, travel, and business services were impacted as cities navigated new public health dynamics and policy adjustments.
Bloomberg reported on December 20, citing figures from China’s Ministry of Finance that the budget picture for January through November showed a deficit that more than doubled versus the same period in 2021, reaching 7.75 trillion yuan (about $1.1 trillion). Tax receipts declined by 23.8% over that period relative to the previous year, while total government outlays rose to 22.7 trillion yuan, an increase of about 6.2% from the prior year. Such fiscal data point to a mix of ongoing stimulus efforts and the direct impact of shifting health and economic policies on government finances, and they highlight the broader macroeconomic pressures facing the country during this interval. These dynamics occurred alongside ongoing adjustments in public spending, revenue collection, and policy support as authorities balanced health concerns with the aim of stabilizing growth across both urban and rural contexts.