The Asian Development Bank predicts that developing countries in Asia are overtaking China in terms of economic growth.
The ADB, based in Manila, Philippines, predicted in its latest report that these Asian economies will grow by 4.3% this year followed by 4.3% in 2023. This is in contrast to the lender's predictions for China, which is but 3.3% in 2022, CNBC reported.
This will be the first time this kind of economic growth happens in more than three decades, the ADB said.
"The last time [this happened] was in 1990, when (China's) growth slowed to 3.9% while GDP in the rest of the region expanded by 6.9%," the lender said.
The new figures are lower than previous forecasts. In July, the ADB had already lowered its growth forecast for China from 5% to 4%, and now it is even lower at 3.3%.
Why the slowed growth predictions?
This is attributed to several factors, foremost of which is the country's zero-COVID policy. The ADB explained that the People's Republic of China has "intermittent but stringent lockdowns" meant to counter "sporadic outbreaks" of the virus. These lockdowns, however, badly affected the nation's economy.
The European Chamber of Commerce, after receiving input from more than 1,800 companies, warned that firms are losing confidence in China as an investment destination, Channel News Asia reported. One of the reasons for this is what they called is the country's "inflexible and inconsistently implemented" zero-COVID policy.
Joerg Wuttke, the chamber's president, pointed out that while other nations around the world have opened up and started to learn to live with COVID, China continues to implement travel restrictions waiting "until the world gets rid of Omicron."
Other reasons for the ADB's lower forecasts include issues in the property sector. Recent reports indicate that consumer confidence in the state has dropped due to problems in the property market. Whereas the property industry has been the symbol of the Asian giant's growth for many years, it has now become a symbol of the Chinese public's loss of trust in their government's economic model.
This is because of the communist party's crackdown on developers, which led to developers losing the ability to continue the development of more projects. This is also partly caused by the country's zero-COVID policy which prevented potential sales of real estate.
Aside from the property sector, economists from the ADB say "deteriorating external demand" from other nations contribute to China's slow economic growth as well.
The European Chamber of Commerce pointed out "increased politicisation" of businesses in the country. It added that some nations who previously had investments in the PRC are looking to shift their businesses to other markets instead.