China expected robust economic growth in 2022. It’s not looking good.

In an emergency meeting last Wednesday, China’s economic czar, Liu He, calmed markets with promises of support and caution for implementing polices that had spooked investors. But doubts remain about whether China can hit its ambitious target, in a reversal of optimism about pandemic-beating Chinese stock performances that until recently had been a draw for foreign capital.

The buildup of pressure on China’s economy also appears to have stalled Chinese President Xi Jinping’s ambitious reform agenda — itself a cause of concern among some investors — which had promised to shift away from prioritizing growth to include environmental sustainability, tackling inequality and developing Indigenous innovation.

Causes of the uncertainty over the economy include both domestic factors — the unclear intensity of Xi’s regulatory crackdown and the worst outbreak of coronavirus since 2020 — as well as external shocks such as the possibility of a rift with the West. There has been the threat of sanctions on China if it provides economic or military aid to Russia amid the already steep turmoil in global markets from President Vladimir Putin’s invasion of Ukraine.

“The fundamental economy is at a very important crossroads,” Zhiguo He, a finance professor at the University of Chicago, said of the recent market turmoil. “A bunch of economic bad news has accumulated over the past half year.”

Within China, much of the unpredictability comes from investors trying to work out how far Xi is willing to go to promote sweeping reforms in education, property, energy and technology sectors, as he prepares to break with precedent and embark on a widely expected third term this autumn.

For Xi, China’s most powerful leader in decades, the upcoming party congress is a critical juncture to put in place senior officials and lock in a policy agenda to bring about his vision of “national rejuvenation.”

Last year, as part of his reforms, the Chinese Communist Party signaled a sharp turn toward “common prosperity” with crackdowns across society to focus on redistributing wealth, curbing unfair competition and reining in excess debt in bubble-prone sectors like real estate development.

But that ideologically laden slogan was less frequently mentioned toward the end of the year, as economic planners stressed stability over reforms. The phrase was absent from the agenda-setting government work report delivered by Premier Li Keqiang earlier this month, suggesting that — for this year, at least — keeping the economy humming is top priority.

In the embattled real estate sector, Chinese regulators promised to stabilize prices and announced a delay to a property tax trial that was expected to further shake things up. Xi also urged caution about the proposed shift to renewable energies over coal, saying, “We cannot throw away the tools that can feed us before getting new tools.”

Martin Chorzempa, senior fellow at the Peterson Institute for International Economics, said recent signals out of Beijing suggest officials still have a degree of flexibility in promoting the new agenda, which some investors had feared was being implemented in an overly rigid fashion.

“We’re seeing a recognition that the approach needs to adapt to the circumstances,” he said. There had previously been a “pile-on effect” where every regulator wanted to demonstrate effectiveness but ended up creating an impossible — and at times seemingly arbitrary — compliance burden. “Without predictability, there’s no investment.”

On top of uncertainty about the direction and speed of Xi’s reforms are fears that China’s attempts to stay out of Putin’s war on Ukraine will ultimately crumble. Beijing claims to be neutral, but economists warn that its failure to criticize the invasion and pledges to continue normal economic ties with Russia, an important strategic partner, could undermine its relationship with more significant trading partners including the European Union, United States, Australia and Japan.

Such concerns come on top of long-standing issues from U.S.-China disputes over trade and technology, including the possibility of Chinese stocks in the United States being delisted over auditing scrutiny from American regulators — a threat that accelerated last week’s sell-off of U.S.-listed Chinese stocks.

How the Ukraine war will impact China’s relations with its trading partners is among the largest sources of unpredictability, because it’s not clear what the global economy will look like after the war, said Nancy Qian, economics professor at Northwestern University’s Kellogg School of Management.

“The question is, what does neutrality mean? We’re really in uncharted territory, in terms of the economic sanctions,” Qian said. “Is it enough if China doesn’t join in the sanctions? If China doesn’t join in the sanctions and keeps trading with Russia, is that neutrality or undermining sanctions?”

On Sunday, Chinese ambassador to Russia Zhang Hanhui encouraged Chinese businesses in Russia to seize opportunities presented by the current crisis and adjust their business models to fill “gaps” in the Russian market, another tilt in the delicate balance China is trying to walk. Many Chinese firms are either reluctant or unable to increase business with Russia in part due to fears of secondary sanctions.

Soaring global energy and food prices caused by the war will add to economic head winds for China, a major importer of commodities such as oil, gas and wheat, unless Beijing is able to buy these products at prewar prices from Russia, according to Shang-Jin Wei, a scholar at Columbia Business School.

Combined with projected U.S. interest rate increases this year, shocks from the war could create lower growth and higher uncertainty in other parts of the world that “would translate into a lower demand for Chinese exports, which is a net negative for the Chinese growth,” Wei said.

At the same time, Chinese officials have signaled that they are ready to do whatever is necessary to ensure that the growth target is met. Yang Guomin, a top economic official, told state media that realizing the goal will not be as easy as before.

“It is a goal that can be achieved only through great efforts and then more great efforts. If you want to reach that peach, then you are going to have to jump,” he said.

That jump, however, might require going back to what worked for China in the past, according to Wei, the Columbia economist. China will need to “return to the key ingredient in its past economic success in the proceeding four decades, namely, giving markets a more decisive role … reinvigorating the dynamism of entrepreneurs.”

The question remains whether such a return to the old playbook can work alongside Xi’s efforts to rein in the excesses of China’s capitalism and increase centralization.

Shepherd reported from Taipei, Taiwan. Lyric Li in Seoul and Vic Chiang in Taipei contributed to this report.