Covid-zero policies and the housing market crisis have put China’s economic growth behind the rest of the Asia-Pacific region for the first time in more than 30 years, according to World Bank forecasts. In a biannual report released on Tuesday, the US-based institution said the annual growth outlook for East Asia and the Pacific region had been downgraded from 5% to 3.2%. However much of that decline was down to economic woes in China, which constitutes 86% of the region’s economic output. The World Bank forecast GDP growth in China – the world’s second largest economy – of just 2.8% for 2022, while the rest of the 23-country region was expect to grow 5.3% on average, more than double 2021’s 2.6% rise. China’s divergent path put its GDP growth behind its neighbours for the first time since 1990. The World Bank said high commodity prices and a post-pandemic rebound in domestic consumption were driving the Asia Pacific rise. But China’s strict commitment to its zero-Covid policy had disrupted industry as well as domestic sales and exports, the World Bank said. A crisis in China’s housing and property development sectors has also worsened conditions. In August, new home prices in 70 Chinese cities fell by a worse-than-expected 1.3% year on year, according to official figures, and nearly a third of all property loans are now classed as bad debts. In 2021 Chinese government figures put its annual GDP growth at 8.1% – the country’s best in a decade, and predicted 5.5% for 2022. This year the World Bank had forecast a slowdown, with growth at just 5%, until Tuesday’s report decreased it even further. For 2023, the world’s second-largest economy was seen growing at 4.5%. China’s government is just weeks away from its most important political event, the twice-a-decade Party Congress where the political elite are reshuffled around the various positions of power in the one-party state. Leader Xi Jinping is expected to be reappointed for a precedent-breaking third term, and with heightened political sensitivity there have been no signs of any relaxation of Covid rules. The hardline policy continues to see tens or hundreds of millions of people under lockdown or other restrictions at any one time, and has ravaged local and national markets. On Monday the OECD also predicted a Chinese slowdown to 3.2% this year, “but policy support could help growth recover in 2023”. Last week the Asian Development Bank also downgraded its forecast for China’s 2022 growth, from 5% in April to 3.3%. It also predicted China’s GDP in 2023 would now only grow 4.5% instead of 4.8%. “As they prepare for slowing global growth, countries should address domestic policy distortions that are an impediment to longer term development,” World Bank East Asia and Pacific vice-president Manuela Ferro in a statement.