The rising cost of China’s property and pandemic curbs

NOT LONG ago China stood out for its economic resilience in the face of the pandemic. Today it is a $17.7trn source of vulnerability in the world economy. A sharp slowdown in its most important sector, property, caused in part by a clampdown on financial excess, threatens growth. So does its zero-tolerance approach to covid-19, which requires doing whatever it takes to extinguish outbreaks. The spread of the Omicron variant, which was reported in Beijing for the first time on January 15th, makes that strategy ever harder and costlier to sustain.

Neither property woes nor the pandemic stopped the economy growing by more than 8% in 2021, according to official figures released this week. Exports boomed as rich-world consumers, encouraged by stimulus, binged on goods. In dollar terms GDP exceeded even pre-pandemic forecasts, thanks to a stronger yuan. Yet China cannot repeat the trick in 2022; it must confront its problems.