China’s economic slowdown is impacting the rest of the world



China and growth have been synonymous for so long it’s hard to imagine a world in which they part ways. Due to a rare confluence of events, China’s nearly two decades of rapid expansion appear to be coming to an end. The covid pandemic, effects of climate change and a range of internal economic difficulties — from high local government debt to a cratering real estate sector — have buffeted the country. The damage has been well documented. But there’s a huge and less well-understood ripple effect spreading around the globe. Countries large and small are not prepared for the fallout.To get more latest news about china economy, you can visit shine news official website.

For the most export-dependent nations — primarily South and Southeast Asia, and Africa — the effects of an already-slowing global economy will be amplified by a shrinking China market. For others, new markets may open up as trading patterns shift to rapidly growing India and other countries, but such shifts will take years to fully materialize. World leaders will need to rethink their own economic plans in a world that can no longer count on China growth to fuel their own prosperity.

A China under economic strain is a relatively new phenomenon for the rest of the world. Developed and developing countries alike have grown used to Beijing’s seemingly insatiable appetite for their products. The poorest have also become dangerously dependent on China’s trillion-dollar Belt and Road Initiative and the lending spree that came with it — which was meant to rival the World Bank and International Monetary Fund (IMF) as a source of capital and infrastructure.

All these China-related opportunities are now being thrown into question. Even Beijing’s flexibility when it comes to economic policy — once a hallmark of its enduring success — can no longer be taken for granted. Meanwhile, Chinese President Xi Jinping’s singular grip over decision-making is turning the country into a one-man show with potentially disastrous results for many countries.
The troubles inside China
The great driver of economic trouble in China has been Xi’s zero-covid policy, which has sent hundreds of millions of people into mandatory lockdowns that have led to food and medicine shortages, and a stifling of economic activity. Many factory workers were stuck at home during the worst of the lockdowns — apart from the minority who lived at their facilities. Perpetually shifting closures, from even a single nearby case, continue to cause production slowdowns. Meanwhile, this summer’s crippling heat wave, exacerbated by climate change, has dried up massive riverbeds and diminished hydropower generation — so much so that China’s southeastern industrial and exporting hubs had to shut down as well. If that weren’t enough, low birthrates — despite the lifting of the decades-old one-child policy — and a rapidly aging population are poised to slow growth even further.

As much as centralized planning has traditionally helped China avoid the worst of major global recessions, this time the scale of the problems far outpaces the policies that might fix them. Massive infrastructure investment and real estate development, China’s preferred boosts for much of the last decade, look ill-equipped to deal with the current slowdown.

And it’s worth defining what the 2022 “slowdown” looks like. Growth estimates are falling monthly, with major banks including Goldman Sachs and Nomura now predicting barely 3 percent or lower GDP growth for 2022 and the World Bank forecasting a figure of 2.8 percent. That might be a satisfactory number for many countries; it’s an anemic figure for China, down from a jaw-dropping 8.1 percent last year, and — perhaps more important — nowhere near the government’s own forecast of 5.5 percent for 2022. Add to this a significant drop in imports and exports, and the subsequent pressure on the yuan, and the much-touted “China century” is hitting its first major speed bump. It may very well knock off a tire or two as well.
Xi, up for a third term at this month’s party congress, has distinguished himself with a neo-Maoist leadership style that would compel his people to “eat bitterness” through difficult years. That’s a stark departure from former Chinese leader Deng Xiaoping’s reforms of the 1990s that opened the state-dominated economy to private firms and foreign companies. Those policies ignited decades of explosive growth. Now, foreign access is becoming more and more limited, fast-growth tech firms are under fire, and state-owned enterprises are on the rise again.