By ZHAO HUANXIN in Washington
A worker at a facility in Hangzhou, Zhejiang province’s Xiaoshan district.
According to the International Monetary Fund, China’s economy will grow by 3.2 percent in 2022 and then by 4.4 percent over the next two years, as the country’s GDP will remain under pressure despite an “impressive” recovery from the pandemic’s initial effects.
The preliminary findings were presented by the IMF on Tuesday, following virtual discussions with senior Chinese government and banking officials, private business executives, and academics during an Article IV consultation from November 2–16, led by Sonali Jain-Chandra, mission chief for China at the IMF.
Article IV of the IMF’s Articles of Agreement serves as the foundation for the consultation. It typically entails the IMF and a member country having bilateral discussions to evaluate the latter’s financial risks and the state of its economy.
According to Gita Gopinath, the first deputy managing director of the IMF, “Under the zero-COVID strategy, China weathered the initial impact of the pandemic well, allowing the economy to recover swiftly from the early-2020 lockdowns and to expand the global supply of medical goods and durable goods at a critical time for the global economy.”
She concluded the virtual visit with a statement that read, “However, China’s growth has since slowed and remains under pressure amid recurring COVID outbreaks, deep challenges in the property sector, and slowing global demand.”
The zero-COVID plan in China, according to Gopinath, who also had virtual talks with a number of senior policymakers, has gotten “nimbler” with time. However, more frequent lockdowns have been brought on by a confluence of more contagious COVID mutations and ongoing vaccination gaps, which have a negative impact on consumption and private investment, particularly in housing.
The regulatory tightening in the real estate sector, while well-intended to reduce high leverage, has added to the severe financial strains already experienced by developers, the statement said. This has caused a sharp decline in local government land sale revenues as well as a sharp slowdown in home sales and investment.
In light of this, she predicted that growth would be 3.2% in 2022 and rise to 4.4% in 2023 and 2024, assuming that the existing zero-COVID plan would be gradually and safely lifted in the second half of 2023.
In its World Economic Outlook published earlier this month, the IMF forecasts that China’s total domestic product growth will match the projected global rate in 2022, but will be 1.7 percentage points higher in 2023.
According to the IMF statement, China also has to contend with external headwinds such as a slowdown in the global economy, an increase in energy prices, and a tightening of financial conditions worldwide.
According to the report, longer-term threats of fragmentation from escalating geopolitical tensions include financial decoupling pressures, restrictions on trade, foreign direct investment, and knowledge exchange around technology.
According to figures from the National Bureau of Statistics, China’s GDP increased by 3% year over year in the first three quarters, up from 2.5% in the first half of the year, demonstrating the economy’s resilience despite certain potential threats.
According to the figures, China’s GDP increased by 3.9 percent between January and September, as opposed to just 0.4 percent in the second quarter.
Many locations have improved their local preventive and control efforts to reduce their impact on life and the economy with the release of 20 guiding measures for more scientific and targeted COVID-19 pandemic prevention and control at the beginning of this month.
The IMF statement said, “Moving forward, a further recalibration of the COVID strategy should be properly prepared and include stepping up vaccination rates and maintaining them at a high level to ensure that protection is sustained.”
Amidst the growing threat of geo-economic fragmentation, and rising levels of debt distress among several low-income countries, and some emerging markets, the IMF also stated that China, along with other nations, can play a leading role in multilateral efforts to address global challenges.
According to the report, China would gain from new agreements in fields like e-commerce and investment facilitation as well as from a system of international trade that is based on rules.
“The G20 Common Framework’s establishment to aid in the debt resolution of low-income nations was a welcome and significant step, supported by China. Making this process of providing relief quicker and more predictable is currently the top goal “In the statement, it was said.