Column-China flirts with Mao era growth: McGeever

investing.com:

By Jamie McGeever

ORLANDO, Florida (Reuters) — The latest readouts on economic and population trends in China are remarkable, highlighting the immense long-term challenges ahead and dragging the growth profile of the world's second-largest economy back to the insular days of the 1970s.

Excluding the pandemic shock of 2020, nominal Chinese GDP growth slowed last year to its lowest since Mao Zedong led the country in the mid-1970s, according to some estimates.

Official figures also showed China's population fell for a second consecutive year, and more than twice as fast as the decline in 2022, which was the first since 1961 during the Great Famine.

While there is a case to make that the gloom among global investors towards China is excessive, one of the lowest nominal GDP growth rates and the fastest population decline in decades are powerful counterpoints.

Analysts at Deutsche Bank estimate that nominal GDP growth last year was just 4.2%. Putting 2020 aside, this would be the lowest annual nominal growth since 1976, the year Mao died.

Of course, China's economy today is unrecognizable from the mid-1970s in its makeup, size and importance to the global economy. But this is a marker.

Calculating nominal growth is an inexact science as it depends on the «deflator» used. GDP growth is usually measured in inflation-adjusted terms, so a nominal reading requires a measure of inflation to be added back on.

Or in the case of China now, a deflation rate to be subtracted.

Official population figures, meanwhile, show that the birth rate in China fell to a record low last year, and the population declined by 2.08 million, or 0.15%, to 1.409 billion.

There's no immediate or clear connection between last year's nominal growth rate and