China saw a record 18.3 percent year-over-year growth in the first quarter. The Economic Times notes that it would be a mistake to conclude from these impressive figures that China’s growth will be maintained, as Beijing is facing a number of challenges. The Frankfurter Allgemeine Zeitung, for its part, looks at the climate summit between the leaders of Germany, China and France, noting that the Chinese Communist Party is trying to find alliances against the United States.
Economic Researchers Expect China’s Economic Growth to Fall to 5.5% Next Year
China’s national economy grew by 18.3 percent year-on-year in the first quarter of this year. An analysis in a commentary published Thursday (April 16) in Germany’s WirtschaftsWoche noted that China’s economy is growing at a record pace, but that this may not last long and that Beijing is facing a major challenge and must prepare for low growth in the coming years.
As the world’s second-largest economy, China’s economy has been hit hard by the new crown epidemic. And now China’s economy is recording the highest quarterly growth in three decades.
Author Malte Fischer begins by analyzing some of the reasons for China’s dramatic economic growth: “The background to the rising numbers – high demand in Western countries for protective medical equipment, electrical goods and furniture – is driving China’s economic growth. This also reflects the demand for equipment such as home office appliances and protective masks due to the impact of the new crown.”
The article then turns the tables and analyzes, “However, it would be a mistake to conclude from these impressive numbers that China’s growth will hold up. First, the year-over-year growth rate is so high also because the previous year’s GDP slumped after China introduced embargo measures. If we disregard this base and just compare this quarter’s GDP to the previous quarter, we can see a disappointing figure of only 0.6% value added after quarterly adjustments. This is the slowest growth since the second quarter of 2020.”
The article goes on to write, “In addition, the Chinese Communist Party is facing significant challenges that will slow economic development in both the short and long term. For example, China lags far behind the West in vaccinating its population, with a vaccination rate of just 13 percent. The UK is at 48% vaccination rate and the US is at 37%. This is likely to delay the recovery of China’s service and tourism sectors. Also, the potential bad debt risk from the high debt ratio of bank assets is a major challenge for Beijing.
The article is entitled “How long can China’s growth miracle last?” (Wie nachhaltig ist Chinas Wachstumswunder?) also writes: “In the long run, the zombification of the economy could be the main problem. Fearing that social unrest could threaten Communist Party power, Beijing will likely continue to do everything it can to prevent a volatile crisis of mass bankruptcies and rising unemployment.”
The authors also note that while the Beijing government hopes to surpass the West in technology as soon as possible. However, the increasing state intervention in the economy and the ubiquitous control, with all its problems, can affect the creativity of technology companies and hold back the free space for technological innovation. Thus, it remains to be seen whether China will be able to achieve a leading global technological power: “Plus, the U.S. will make it harder for the CCP to gain access to Western expertise. The more the geopolitical conflict between the U.S. and China intensifies and the more resource areas are affected, the less dynamic China’s economic growth will be.”
The article concludes by stating, “Taking all factors into account, economic research firms expect China’s economic growth to fall from 9.5 percent this year to 5.5 percent next year.”
Beijing’s early step is an attempt to steal the thunder from the Biden administration, which has invited a number of global leaders to a virtual climate summit next week. More importantly, this approach is more about creating a wedge between Europe and the United States. In this way, it’s more of a political drama than a real focus on climate issues.” So begins a commentary published in the Frankfurter Allgemeine Zeitung this Saturday (April 17) about the video summit of German, Chinese and French leaders held first on Friday, just under a week before the virtual summit on global climate change hosted by Biden.
Is China really ready to push for action on climate change? Author Klaus-Dieter Frankenberger goes on to write: “If Beijing’s top brass is serious about the claim that China and Europe should be at the vanguard of global climate policy, then it should put it into action. But the reality is this: China is the world’s largest emitter of greenhouse gases, a major coal burner, and this trend in coal use is on the rise.”
The article titled “China sucht Verbündete gegen Amerika” (China seeks allies against the U.S.) states, “China’s economy faces a major transformation if it is to meet its commitment to reduce net greenhouse gas emissions to zero by 2060. Is Beijing ready for this? Or would it rather continue to dwell on the economy’s growth figures? Macron and Merkel should not be led by Xi Jinping. His plan is clear: he is looking for allies against the United States.”
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