China’s economy grew just 3% last year, well below the government’s previous target of around 5.5% as headwinds including stringent Covid restrictions and a crackdown on the real estate sector took a heavy toll.

The much-awaited gross domestic product figure, unveiled Tuesday during a televised press conference held by the National Bureau of Statistics, also marks one of the worst growth rates seen since the 1970s. Although the data showed a marked slowdown in economic activity, it was slightly better than estimates including the World Bank’s earlier forecast of 2.7%.

Officials expressed a note of optimism by saying that the economy held up under pressure from a volatile international environment as well as the difficult task to reform and maintain stability domestically.

At the end of last year, the central government quickly dismantled its signature “Covid-zero” policy, which will certainly give a strong boost to the economy in 2023. The policy, which has seen the financial hub Shanghai undergoing a grueling two month lockdown earlier this year, exerted a heavy toll during the second quarter—with the economy expanding a mere 0.4% back then.

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Now that China is reopening to the world, the top leadership is also voicing more support for the private sector. Officials are easing their crackdown on the property sector by providing fresh credit and allowing extensions in debt repayments, which sparked a recent rally in the shares of real estate developers. Another major source of growth, namely the internet sector, is also finding a more friendly regulatory environment as well.

Chinese ride-sharing giant Didi Group, which has been undergoing a cybersecurity investigation since its controversial $4.4 billion listing in New York in 2021, announced on Monday that it has finally been allowed to sign up new users. The news comes on the heels of Ant Group receiving approval in early January for for its $1.5 billion fundraising plan. The fintech giant had seen its $35 billion initial public offering abruptly cancelled in late 2020.

For 2023, China is likely to settle for a growth target of around 5%, says Shen Meng, managing director of Beijing-based boutique investment bank Chanson & Co. The number is a “baseline” for ensuring enough job opportunities for the country’s growing number of college graduates. “There is still big pressure to complete this goal,” he says. “Internal demand is yet to rebound, and external demand is being affected by what is likely to be a global recession.”

Furthermore, China is facing a looming demographic crisis. The National Bureau of Statistics also announced on Tuesday that the country’s population declined by 850,000 people to 1.41 billion—marking what is likely to be a first such drop since the 1960s. The country is now said to be grappling with an aging population and labor shortages in some areas.

Almost 60,000 people died from Covid between December 8 and January 12, the country’s National Health Commission announced last weekend. But that number has come under intense scrutiny given the scale of the outbreak and mortality rates seen in other countries.