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العربيةAccording to ISNA news agency, the severe slowdown of China’s economy caused by its strict rules to deal with zero covid and Beijing’s move away from traditional reliance on foreign demand has created doubts about the extent of the country’s participation in future global trade and investment.
While China experienced a significant recovery from its initial recession thanks to exports and factory production, analysts expect the current recession to be harder to break than the one seen in early 2020.
The bleaker outlook will pose challenges not only for Beijing’s leaders, who worry about rising unemployment, but also for foreign businesses counting on China to resume its pre-pandemic levels of engagement with the rest of the world.
Calculations based on the forecasts of the International Monetary Fund show that the average annual share of China in the growth of the world economy until 2027 is about 29%. While this increase is significant, it contrasts with the years after the global financial crisis in 2008, when the average was 40 percent.
Raymond Yong, chief economist at ENZ Bank, said Beijing’s economic policies have recently shifted towards domestic solutions and reforms. “Successful execution of these may pave the way for sustained long-term growth,” Jung wrote in a note. However, the risk of failure to achieve similar growth rates is greater.
China’s export growth fell to single digits in April, the weakest since the pandemic began, while imports were little changed as Covid-19 restrictions halted factory output and dampened demand, according to Reuters. In a sign of that caution, China last week gave up the right to host next year’s AFC soccer final due to concerns over the Covid-19 pandemic.
Beijing has defended its policies and downplayed the global ripple effects. Last week, an article in the state-run Global Times stated that Covid-19 is the most appropriate strategy to fight the virus and keep the economy stable, with a strong contribution to global growth expected to continue. Brian Colton, chief economist at Fitch Ratings, acknowledged the disruptions caused by the Covid-19 pandemic but did not see it as a serious problem for global growth.
Recent outbreaks of the domestic pandemic have meant that authorities have not only shut down large parts of the manufacturing sector, adding to global supply shocks, but have also doubled down on restrictions restricting people’s movement in and out of the country. The American Chamber of Commerce in China warned on Tuesday that tighter Covid-19 controls will hamper foreign investment in the country for years to come as travel restrictions hamper projects.
A survey of German chambers of commerce and industry last week showed that 47 percent of German companies in China were critically reviewing their activities there, and one in eight companies were even considering exiting the country.