Developing Asia’s economy is expected to grow faster than China’s in 2022 for the first time in more than three decades, the Asian Development Bank (ADB) stated in its report on September 21.
The last time was in 1990, when the growth of the Chinese economy slowed to 3.9%, while gross domestic product (GDP) in the rest of Asia grew by 6.9%.
The report projects that China’s GDP will grow by 3.3% in 2022 and 4.5% in 2023, while the growth forecasts for developing Asia, ex-China, stand at 5.3% for 2022 and 2023. Developing Asia comprises 46 regional ADB members – Caucasus and central Asia, east Asia, south Asia, south-east Asia and the Pacific countries – among its 68 members.
“Sporadic Covid-19 outbreaks and renewed lockdowns in China have slowed that country’s growth momentum, causing negative spillovers on other economies,” the ADB added in the report.
Despite the economic recovery backed by improved consumption and investment, the ADB downgraded the growth forecasts for the region from the previous predictions released in April, noting that external challenges including the US’s tightening monetary policy, and lingering effects of the war in Ukraine are hindering a faster recovery.
The development bank said the downward revision is driven by lower forecasts for growth in east Asia, while it expected the south-east Asian region to experience higher growth than the bank projected in April. Its initial prediction for subregional growth stood at 4.9% for 2022.
This happened amid China’s new record low level of foreign direct investment (FDI) in the first half of this year amid global challenges.
The overall FDI records in the region show the clear contrast. According to fDi Markets, Chinese market share has shrunk gradually over two decades since records began in 2003. China accounted for 49.1% of the market share in FDI projects compared to its regional competitors in 2003. However, between January and July 2022, Chinese FDI market share plummeted to below 10%.
In the meantime, other south Asian and south-east Asian countries have started growing their stakes in FDI projects. India and Singapore even outpaced Chinese market share in Asia from January to July 2022.
Rhodium Group, a US research company, said in its research that the European companies have been sceptical of the Chinese market because of slow economic growth and rising geopolitical tension since the pandemic. The country is seeing fewer new entrants into its market, according to its research on European FDI in China, which was released on September 14.