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Will 2022 become China’s make or break year as “stability” becomes the new mantra?

Chinese President Xi Jinping

The year 2022 will be critical for China—a break or make year. The year 2021 was marked by stringent regulatory clampdown especially on the private sector but Beijing, which is now witnessing a slowdown in its economy, could shift gears next year and focus on stability.

Most economic projections have pointed towards a slowing GDP growth in 2022 as the country grapples with several challenges such as supply chain disruption, acute power shortage, Covid 19 related restrictions, a collapsing real estate sector among others, prompting Chinese President Xi Jinping and his team to focus on bringing in economic stability.

CNN said that the ruling Chinese Communist Party has underlined the need to focus on stability in the new year. The decision was taken at a “key economic meeting” earlier this month. “That's a huge pivot from last year's meeting, when "curbing the disorderly expansion of capital" ruled the day,” CNN said in a report.

“China’s economic recovery is currently on shaky ground and unless the government makes a course correction, things will become even tougher especially amid the changing geopolitical landscape,” DK Srivastava, chief policy adviser EY India told India Narrative.

Also read: China's focus on food security will increase in the new year

Xi’s call for Common Prosperity has also dampened sentiments.

China’s economic growth in the third quarter of this year slowed to 4.9 per cent, much below expectations.

In the January to March quarter Beijing had stunned the world with an 18.3 per cent economic growth. However, economic growth has been slowing since then. In the second quarter, China, the first country to come out of the Covid 19 pandemic, clocked a GDP growth of 7.9 per cent.

“Citizens in China have also been hit by uncertainty and anxiety. Most of them have tightened their purse strings as the government has come down heavily on the private sector, which generated the majority of jobs in the urban areas,” an analyst said, adding that consumption has taken a hit.

Beijing has underlined the need to expand consumption for sustained growth.

“But such unexpected measures from the government has jolted investors as well as common citizens and this has impacted consumption,” the analyst said, adding that stability of economic policies will be crucial for recovery as it will draw investors while creating jobs.