During the previous financial crisis, the Chinese authorities provided significant support to the country’s economy in the form of economic stimulus worth 4 trillion yuan (over $574.86 billion). This program was not only a leading factor in China’s economic recovery, but also helped Western countries deal with the crisis.
However, now the world’s second largest economy is stabilizing relatively more difficult after the pandemic. In addition, geopolitical problems will hardly allow China to stop the onset of recession on a global scale, Deutsche Welle notes.
Although the Chinese authorities lifted most of the strict restrictive measures against the spread of the coronavirus in December last year, the country’s economy is not working at full speed.
China’s imports surprisingly fell 7.9 percent year-on-year in April amid subdued domestic demand, while the pace of export growth slowed (8.5 percent) compared to March (14.8 percent). , according to the official data of the Chinese customs authorities.
Industrial production is also slowing, and the latest data on the Asian country’s trade balance is a sign that China has a long way to go before it reaches pre-pandemic levels of domestic consumption, Reuters noted.
Chinese officials have repeatedly warned that the country faces a “difficult and complex external economic environment” due to the risk of recession in many of the countries that are Beijing’s key trading partners.
Meanwhile, the volume of loans granted by banks in China fell in April much more sharply than expected. Yuan loans totaled 718.8 billion yuan ($103.3 billion) last month. That was less than a fifth of the 3.89 trillion yuan ($559.05 billion) in loans in China’s national currency in March, data from the People’s Bank of China (PBOC) showed.
Is this the end of China’s golden age?
A contraction in credit activity is usually a sign of a slowdown in the economy’s growth rate, analysts note.
“The Chinese economy is not about to collapse, but it is also not about to return to the golden decade after 2010, when it registered double-digit annual growth,” Professor Steve Tsang, director of the China Institute at the University, told Deutsche Welle. in Oriental and African Studies in London.
A strong recovery in China’s economy would largely offset the expected economic slowdown in other parts of the world brought on by the policy of raising interest rates and tightening the money supply pursued by leading central banks over the past 12 to 18 months.
During the financial crisis in 2008 and 2009, the Chinese authorities supported the country’s economy, but the huge funds they poured into it then cost China a “mountain of debt”.
In March, the International Monetary Fund warned that the debts of regional governments alone in the Asian country had risen to a record 66 trillion yuan ($9.48 trillion), equivalent to half of China’s gross domestic product.
Against this backdrop, Western policymakers who hope Beijing will revive their countries’ economies will have to “take off their rose-colored glasses and face the true political and economic realities,” notes Professor Tsang.
Photo: BTA
China’s strained relations with the West
Threats, which the rulers in Beijing have periodically made that China will invade Taiwan, as it considers the island part of its territory, have met with a sharp reaction from the West.
The increasingly close ties between China and Russia, amid Beijing’s pro-Moscow neutrality over Russia’s military invasion of Ukraine, is another important reason for the Asian country’s strained relations with Western nations. This opposition puts global economic cooperation at risk, Deutsche Welle notes.
“As for Taiwan, a sharp rise in tensions or a possible war will cause shocking changes. Multinational companies will leave China. Its export markets will collapse and sanctions will be introduced (against the country – note ed.)”, he noted before ” Deutsche Welle” Pushan Dutt, professor of economics at the Singapore branch of the European Institute of Business Management – INSEAD.
The strained relations between China and the US in the field of trade since the time of the administration of Donald Trump have been preserved under the administration of the current US President Joe Biden. Washington has imposed sanctions on some Chinese companies and officials. In addition, for national security reasons, the US has restricted China’s access to US technology in semiconductors and artificial intelligence.
“The aggressive foreign policy that Chinese President Xi Jinping is imposing has forced the United States and other Western countries to start limiting the risk that arises because of their economic ties with China. This means that the key factor (business with the West – ed.), which previously supported China’s rapid economic growth is diminishing in importance,” said economist Prof. Steve Tsang.
Western politicians increasingly see the Belt and Road Initiative (BRI) as a threat to their interests. Also known as the new “Silk Road”, this initiative involves investments of about 840 billion dollars in the construction of roads, bridges, ports and hospitals in more than 150 countries.
However, there are growing concerns that this Chinese initiative has saddled a number of developing countries with huge and unaffordable loans, while weakening their ties with Western nations.
Last month, European Central Bank President Christine Lagarde expressed fears that the global economy could split into rival blocs led by China and the United States. She warned that this would harm global economic growth and increase inflation.
Photo: BTA
2023-05-20 16:30:11
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