By most international standards, China 4% Year-on-year growth in the fourth quarter of last year was quite solid. However, while it was slightly above most analysts’ forecasts, it was the slowest expansion in 18 months — down from 6.5% in the same period in 2020. Overall, GDP grew by 8.1% in 2021. Continued cooling in China’s expansion will have global implications: According to the International Monetary Fund, China is the largest contributor to global GDP and will account for more than one-fifth of total global growth in the five years to 2026.

It is worth noting that the three main factors dragging down the Chinese economy largely stem from government policies. The months-long crackdown has targeted industries such as fintech, online education and entertainment, as well as social ills such as celebrity culture, gaming and women’s fashion trends.

The downturn in the property market is estimated to have contributed nearly 30% of GDP, stemming from Beijing’s insistence that property developers must reduce their debt ratios to within the “three red lines” announced in 2020. Evergrande Crisis, the world’s most indebted real estate company, and several other developers are investing heavily in real estate activity.

A third obstacle to growth is Beijing’sZero Covid“Strategy. About half a dozen cities are now under partial lockdown as authorities try to track down everyone who has contracted the highly contagious Omicron virus. Goldman Sachs cut its forecast for China’s GDP growth this year to 4.3 percent from 4.8 percent, saying this is in line with the Coronavirus-related restrictions are a factor.

So, at least in part, China’s slowdown is self-inflicted. But it’s hard to see Beijing giving itself much room to ease policy in these three key areas. Every element of its crackdown appears to reflect a firm official belief in industries ranging from fintech to online gaming.

Correctly assessing that debt levels are dangerously high has driven the rationalization of the housing market. Doubts about the efficacy of China’s Covid vaccine partly explain Beijing’s zero-tolerance approach to Omicron.

However, China needs to take steps to revive economic activity in response to what Ning Jingzhe, head of the National Bureau of Statistics, calls the “domestic economy”. . . under triple pressure of demand contraction, supply shock and weakening expectations.”

Chinese President Xi Jinping sounded a pro-growth tone in an online speech at the World Economic Forum’s annual meeting on Monday. He said China’s policy “common prosperity” used to be not egalitarian Instead, it intends to “make the cake bigger first”, and then distribute it rationally through institutional arrangements. The People’s Bank of China also appeared concerned about weak growth, cutting its key lending rate on Monday for the first time since April 2020.

Further relaxation can be done in a sensible way; Beijing should reflect that its debt and property problems are partly caused by previous excess liquidity. Beijing could also step up engagement with Washington as it seeks to end the U.S.-China trade war. The removal of tariffs by both countries in 2019 and 2020 will help curb U.S. inflationary pressures, boost trade and set a more positive tone for cross-border investment, which has slumped over the past three years. That may not be enough to drive China’s GDP growth. But it would be a step in the right direction.