The Chinese market for card payments, which has been among the fastest-growing globally, experienced an adverse impact from the COVID-19 pandemic. However, with the government’s recent announcement regarding the termination of the “zero-COVID policy” and the relaxation of restrictions, the market is anticipated to witness a 3.6% growth rate in 2023, forecasts GlobalData, a leading data and analytics company.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “Card payments in China, which registered robust growth during the past decade, were affected in 2020 due to the reduced consumer spending and economic uncertainty in the wake of COVID-19 pandemic. While the economy rebounded in 2021 supported by the government’s stimulus packages, nationwide vaccination and reopening of businesses, another slowdown was seen in 2022 due to the resurgence of new cases and the subsequent lockdown measures.”
The Chinese card payments market experienced its first contraction in 2020 after a decade of robust growth. However, with the economy bouncing back, the payment card market surged in 2021 registering a strong growth of 16.6% with total card payments reaching CNY136 trillion ($19.7 trillion).
Meanwhile, 2022 witnessed surge in new cases which led to a fresh series of lockdowns and widespread testing as part of the government’s ‘zero-COVID policy’. To achieve this, government imposed fresh lockdowns in cities like Beijing, Shanghai, and Guangzhou.
With government announcing the discontinuation of its zero-COVID policy towards the end of 2022, recovery in economy is expected. The end of the policy means easing of restrictions and re-opening of businesses. According to International Monetary Fund (IMF), China’s economy is expected to grow by 5.2% in 2023, up from 3% in 2022 supported by rebound in household consumption.
Sharma concludes: “With economic recovery and rebound in consumer spending, growth in card payments is expected in the coming years, though at a slower pace. Card payments market in China is expected to register a slower compound annual growth rate (CAGR) of 6.1% between 2022 and 2026 to reach CNY168.2 trillion ($24.3 trillion) in 2026.”
