In the difficult economic situation in China, the government withheld important data on growth and foreign trade during the Communist Party Congress.
In a rare step, the statistical office on Monday surprisingly postponed the announcement of economic development in the third quarter, which was planned for the following day. Customs had already postponed the publication of the export and import figures. Reasons were not given.
An employee of the statistics office did not name a new date. When asked whether the postponement was related to the party congress, she said: “I cannot answer your question.” The second largest economy is currently producing rather bad news, which is also overshadowing the deliberations at the current party conference.
The zero-Covid strategy in particular is slowing down the economy, which is also suffering from a serious real estate crisis, high levels of debt and weak domestic demand. As the rest of the world tries to live with the virus, China’s leadership remains committed to nipping any outbreak in the bud with lockdowns, mass testing and quarantine. The zero-tolerance goal is becoming increasingly difficult to meet as new variants spread more easily.
Will China miss its growth target?
In the second quarter, the economy had grown by 0.4 percent. Experts expect 3.5 percent in the third quarter. But the government is likely to fall well short of its growth target of 5.5 percent for the year. The World Bank expects 2.8 percent in China. After the first pandemic year in 2020, this would be the second time in four decades that growth has been so low.
“For the first time since 1990, the rest of Asia is growing faster than China,” said Jörg Wuttke, head of the EU Chamber of Commerce in China, based on World Bank estimates. He pointed out that other Asian countries dealt with Covid in fundamentally different ways and had returned to normal. According to the World Bank, the region excluding China is expected to grow by 5.3 percent.
Irrespective of the economic problems, the head of the Reform and Development Commission, Zhao Chenxin, told the press at the party congress that he was optimistic: “The economy really recovered in the third quarter.” He acknowledged “difficulties and challenges” and “greater than expected shocks” this year.
There have been monthly fluctuations due to the external environment, the pandemic, extreme weather and other unexpected factors. But overall, China is on the path to recovery.
Zero Covid strategy weakens economy
Of all of China’s salient problems, “zero-Covid and how to get out of it” is the biggest, said expert Richard McGregor of Australia’s Lowy Institute. “It just seems to be giving the economy a hammer blow.” The International Monetary Fund also warned that the crisis in the real estate sector could spill over to banks, companies or local governments.
In order to stimulate the economy, China’s government is pumping money into the economy. The central bank has lowered interest rates several times. New bank loans nearly doubled in September. Unlike in Europe, where inflation is at record highs and interest rates are rising, prices in China have risen only slightly – in September by 2.8 percent compared to the same month last year.
