China’s economic slowdown may have worldwide impact: report

Beijing:

The country’s annual GDP growth fell to 3 percent, according to China’s National Bureau of Statistics (NBS), which is far short of an official target of 5.5 percent in 2022 and its economic slowdown has the potential to cause ripple effects around the world. , Reported financial position.

The concerns and challenges facing China and the global economy were well articulated by Liu He, Vice Premier of the People’s Republic of China, speaking at the World Economic Forum in Davos 2023.

“Over the past five years, we have experienced all kinds of unexpected events, and witnessed profound changes in the world’s political and economic landscape. Therefore, the theme of this year’s annual meeting ‘Cooperation in a Fractured World’ could not be more relevant Might,” he said.

“The COVID-19 pandemic punctured China’s growth saga. China’s GDP growth was also slightly lower than the forecasts published by the IMF in October 2022. The GDP growth rate was expected to be around 4.4 per cent in the IMF forecast for 2021 USD 18 trillion in 2016 mainly due to the sharp rise of the dollar against the RMB. This is the slowest growth of the Chinese economy since it recorded 2.3 percent of GDP in 1974,” the Financial Post reported.

Observers were already talking of China falling into the middle-income trap and now, evidence has emerged that the country is on the verge of a high growth rate of anywhere near 10 percent or more, recorded in the late 1980s. It’s getting hard to keep up with your miracle. and throughout the 1990s.

Kim Byung-yeon, author and professor of economics and head of the Institute for Future Strategy at Seoul National University, argued succinctly that “the Chinese economy is slipping into the middle-income-country trap.”

According to Kim, in the case of China, the productivity which determines the long-term growth rate has come down sharply.

The downtrend has deepened since 2014. China’s rapid growth over the past 15 years has come primarily from infrastructure investment—building factories, housing and roads—and less from structural reform and innovation. Broad-based growth led by capital and labor inputs is not sustainable, reports the Financial Post.

The sharp decline in Chinese GDP growth in 2022 was blamed on a number of factors, mainly China closing itself off from the outside world due to its ‘Zero COVID’ policy. The slow pace was mainly blamed on the strict ‘Zero Covid’ policy that led to periodic lockdowns and a lingering real estate crisis apart from the ruling Communist Party’s crackdown on large industrial firms.

The most troubling fact that emerges from the NBS data is that China, the so-called ‘manufacturing hub’ of the world, has recorded a meager 3.6 per cent year-on-year growth in industrial production in 2022. of and even less than 1.3 percent. Percentage in the month of December. Zhu Hong, a senior NBS statistician, highlighted a return to Covid outbreaks in November and a slump in demand, which curbed industrial production and increased pressure on Chinese businesses.

According to him, factors weighing on slow industrial growth included reduced profits from anti-virus restrictions in large manufacturing hubs such as Guangzhou and Zhengzhou, and from the persistent burden of a prolonged asset crisis and slowing exports, reports the Financial Post. .

NBS data for November 22 showed 21 out of 41 major industrial sectors saw profit declines, with the ferrous metals smelting and pressing industry suffering the biggest decline, at 94.5 percent. This compared to a decline of 92.7 per cent for the first 10 months.

Another reason for the industrial slowdown is that many Chinese companies are also facing Western sanctions, including the US, especially against Chinese tech companies that allegedly violate data security and steal patents. .

FBI Director Christopher Wray told the World Economic Forum (WEF) that he was ‘deeply concerned’ about the Chinese government’s artificial intelligence program, adding that it was “not constrained by the rule of law.”

(This story has not been edited by NDTV staff and was auto-generated from a syndicated feed.)