China poised to propel global economic growth against headwinds
No sooner has the global economy recovered from the last two years of the COVID-19 pandemic than the Russian-Ukrainian conflict, which has significantly disrupted supply chains for such essential commodities as gas and grain. , further aggravated the situation.
Amid a combined impact of various challenges – including the resurgence of COVID-19, uncertainties on the international stage, and the risks brought by rising protectionism and de-globalization, in the full glare of global attention asks whether China is capable of continuing to drive global economic growth?
Although the complexity of the situation seems to cast a shadow over the future of the world’s second-largest economy, China is showing great confidence in addressing these thorny issues and has managed to strike the right balance between responding to the pandemic and economic development.
In light of what China has achieved in recent years, economists and China watchers believe that the country, given its remarkable economic resilience and effective macroeconomic policies, will soon emerge from the current difficult situation and give a new impetus to the global recovery.
Opportunities Hidden in Challenges
These days, several Chinese cities, including the financial center of Shanghai, were struggling with the ultra-contagious variant of Omicron. While the resurgence of COVID-19 has partly caused an economic slowdown, changes in the geopolitical landscape have also pushed China, commonly seen as a powerhouse of global growth, to face mounting downward pressure.
However, analysts believe that the problems facing the Chinese economy could turn out to be opportunities. The process of resolving these issues can be seen as a period of adjustment for domestic policymakers, which will also open a window of opportunity for global investors.
China has already adopted multi-pronged fiscal measures in tax and fee cuts, public budget spending and bond issuance to stabilize the economy and ensure the well-being of its people. In addition, as part of its efforts to promote the dual circulation strategy and high-quality development, it has accelerated the establishment of a unified domestic market, deepened reform and opening up at all levels and continued innovation-driven development.
In a recent interview with Xinhua, Yu Hong, a senior research fellow at the National University of Singapore’s East Asia Institute, said building a unified domestic market would help China reduce the drag on its economic development.
Meanwhile, Chinese companies are still attractive to investors given their price-to-earnings ratio, said Horst Loechel, professor of economics at the Frankfurt School of Finance and Management. “You have some interesting stocks to invest” in the hope that temporary difficulties will not hamper China’s economic growth, he added.
In the first quarter, actually utilized foreign direct investment in mainland China rose 25.6 percent year on year to 379.87 billion yuan ($57.5 billion), according to China’s Ministry of Commerce.
Standard Chartered Bank, for example, is very optimistic about China’s long-term development prospects, according to Jerry Zhang, executive vice president and general manager of Standard Chartered Bank (China).
In February, the banking group announced a $300 million investment in China-related businesses over the next three years, “to help our customers seize opportunities arising from reform and China’s continued opening up,” Zhang told Xinhua in a written interview.
Solid economic fundamentals
China’s GDP grew 4.8% year-on-year in the first quarter, while its inflation growth remains subdued so far, with its consumer price index remaining fairly low.
The data reflected the strong resilience and dynamism of the Chinese economy, which is based on solid economic fundamentals.
“The more multinationals know and integrate their operations into the Chinese economy, the more multinationals will have confidence in China’s long-term growth and prosperity,” Zhang said, referring to China as the world’s largest manufacturer. with the most comprehensive and resilient supply. chain system, and the second largest consumer market with huge demands.
“China has undertaken structural reforms that focus on positioning the fundamentals for change, transforming the economy from low-end manufacturing, to high-end services, to innovation,” the director told Xinhua. of the Nigerian Center for Chinese Studies, Charles Onunaiju.
“Even when shocks as unpredictable as the pandemic occurred, the very strong foundations of these key economic categories were able to absorb it,” he added.
Many analysts believe that China has adequate instruments and policy conditions to resist risks and stabilize the market, and will release greater potential for further development.
From the perspective of fixed asset investment, retail sales of consumer goods and industrial value added, the main factors supporting China’s economic growth have recovered better than expected, Fiorenzo Manganiello, co-founder of Lian Group, a company specializing in direct investment in Europe, told Xinhua.
Similarly, Yu, the Singaporean scholar, believes that the factors supporting China’s long-term economic growth have not changed and China is still a strong magnet for foreign investment.
Collins Appiah, an economist at Ghanaian banking institution Services Integrity Savings and Loans, predicts a better performance for the Chinese economy in the second half of the year. “With COVID-19 being effectively managed, it should return the Chinese economy to its strong and robust growth patterns as in the past,” he said.
Drive global growth
Despite the epidemic’s short-term impact on socio-economic development, what China is doing is reminiscent of the 2020 episode, when it largely overcame the repercussions of COVID-19 by implementing the dynamic zero policy. -COVID and became the only major economy to record positive growth.
At this stage, market players keep a close link with their Chinese partners and pin their hopes on China to give a boost to global growth.
China has long advocated globalization and regional economic integration, proactively engaging in various multilateral mechanisms, such as the Belt and Road Initiative (BRI) and the Regional Comprehensive Economic Partnership (RCEP). , which Manganiello called “powerful engines for the recovery of the economy”. Mondial economy.”
Cavince Adhere, an international relations specialist based in Kenya, said China carries the hopes and aspirations of many countries, and cooperation with China through channels such as the BRI serves “the collective interest of all countries. “.
Wichai Kinchong Choi, senior vice president of Kasikornbank, a major Thai bank, said RCEP is expected to further boost regional growth as a model for multilateral cooperation. Citing Thailand as an example, he said a surge in exports to China has been one of the few bright spots for the Thai economy.
Diaa Helmy, Secretary General of the Egyptian-Chinese Chamber of Commerce, praised China’s role in “supporting development in Egypt, the Middle East and the African continent”, noting that the mutually beneficial cooperation with China is welcome in these regions.
Under multilateral frameworks, China is stepping up investment in trade and transport infrastructure for a safe and efficient logistics system, which is expected to create competitive advantages for the country and its global partners.
From January to March this year, China’s non-financial outward direct investment reached 170.95 billion yuan ($25.88 billion), up 6.3 percent year on year.
Noting that China continues to support the global economy, Sinan Alcin, a Turkish economics and management consultant, said he was confident that in the coming period, China will continue to play a leading role with new leaves of on the international scene, particularly in areas concerning the BRI and the RCEP.