Tuesday, September 28, 2021

China’s growth has slowed as epidemic fears persist

BEIJING – A year after the global economy emerged from the epidemic, China’s growth is now starting to equalize as the world seeks to determine whether recovery will continue.

Consumers and firms mix symptoms by showing signs of both weakness and strength. Rising costs of raw materials are eating away at the profits of factories and retailers, while exports remain strong. People are shopping more, but small businesses are losing out. Inflation is starting to rebound, littering the data. And the ongoing uncertainty of the epidemic weighs on top of all this.

“It’s not clear whether such a strong comeback in China and around the world could hold its own in 2022,” said Zhu Ning, vice-dean of the Shanghai Advanced Institute of Finance.

China said on Thursday that its economy grew 7.9 percent from April to June, down from the same period last year. Although that momentum was still stronger than other speeds, the economy was significantly slower than the 18.3 percent it made in the first three months of the year, coming back from a lockdown a year ago.

China’s final trajectory will closely monitor the world. If China continues side by side, it could be a stable recovery for the United States and other countries now to return away from their epidemics. If its economy slows down, it could drag on with the rest of the global economy. Many countries are now dependent on Chinese factories and customers.

Economists warn that China’s real economy is not as strong as it was on Thursday. Inflation means that some figures, such as retail sales in June, exaggerate what is actually happening. Rising prices also suggest that the performance of the Chinese economy in the spring may not be sustainable.

The Chinese government has recently signaled that economic growth could be in trouble. Premier Li Keqiang held three high-profile meetings last week on the health of the economy and issued statements after each of them, ordering an ice storm to sustain growth.

The most important of these measures was a policy shift by the central bank. China’s central bank has helped small businesses get loans; Starting on Thursday, commercial banks may keep cash reserves somewhat smaller. Theoretically, this frees banks to pay more, which could stimulate business investment and consumer spending.

Relying on the country’s economy is a frozen mountain. A quarterly survey of businesses across China in the China Basebook in recent weeks found that many orrow buyers, especially retailers, have been wary of taking out. Companies fear they may not be able to pay extra.

Growth in the April-June quarter of the year was expected to be lower than the steep growth that China reported in the first three months of the year. The growth rate in the first quarter was partially contracted because it reflected how much economic output shrunk in the first three months of 2020 at the height of the outbreak in China.

Just before the release of the latest data, World Bank President David Malpas said, “China’s recovery was much faster than last year – this pace could be difficult to maintain,” said World Bank President David Malpas.

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Barclays Bank said in a research note that China felt that the scope of new annual growth had come down to .5.5 percent. Growth is better than most Western countries, slower than the .5 decimal growth percentage that China had before the epidemic.

“At home, the economic recovery is unbalanced,” said Liu Aihua, a spokesman for China’s National Bureau of Statistics. “More efforts are needed to consolidate the foundations for the uninterrupted recovery of development.”

Some of the problems of Chinese traders are that common steel national industrial materials such as iron ore, copper and oil have become more expensive than last year.

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For San Liun, who sells stoves and range hoods in the eastern Chinese city of Jinan, the increase in global steel spending means a 30 to 40 percent jump in wholesaler wholesale prices, much of which he has had to accept.

“The price of the equipment is going up, but the price we are giving to the customers can barely go up,” he said.

Small business survival now has a bigger role to play in how China can weather the epidemic and keep people employed. More than 100 crore people work in retail and wholesale companies.

Retail sales rose 12.1 percent in June as a result of rising online spending, according to the Bureau of Statistics.

Most economists expected retail sales to weaken in the month. Car sales plummeted, and the outbreak of the new Covid-19 in Guangdong led to lockouts in large neighborhoods and restrictions on social gatherings and travel.

However, the increase in retail sales may be partly due to the increase in prices. According to economic data provider CEIC data calculations, the broader measure of the Chinese economy in April grew 5.3 percent in April compared to a year earlier. This is the biggest jump in almost a decade, driven by higher global prices of raw materials.

Retail sales also fell in recent weeks as the tourism and other services industries slowed.

Passenger rail travel, including bullet trains, now the mainstay of China’s major intercity travel, sank by 19.9 percent in June compared to the same month in 1999, before the epidemic. In contrast, passenger rail traffic fell by only 4.5 percent in May compared to two years ago.

The weakness of the domestic travel sector is visible in Kafu, the original city of Confucius, 100 miles south of Jinan. On Sunday and Monday a few tourists walked the streets and many shops were empty.

Business owners in the city said more than half of them were tourists as a result of the epidemic.

“It’s not easy for anyone now,” said Xiao Weizun, who owned a cheap meal near the temple 2,500 years ago. “I feel like we won’t be able to recover our lives in the next two years.”

Lee you And Liu Ye Contribution research.

China's growth has slowed as epidemic fears persist
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