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China is becoming the sick man of Asia


According to a forecast by the World Bank, China's economy will grow more slowly than the rest of Asia for the first time since 1990. This also harbors political risks.

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Container ship in Qingdao port

Photo: STR/ AFP

The World Bank is predicting far weaker growth than expected for the Chinese economy.

Accordingly, the increase should decline from 4.3 percent to 2.8 percent in the current year.

As a result, China's GDP would grow more slowly than that of Vietnam, the Philippines, Malaysia or Indonesia and that of other countries in East Asia and the Pacific for the first time since 1990.

The forecasts for this economic area have recently improved significantly.

The region excluding China is expected to grow 5.3 percent this year, thanks to high commodity prices and a recovery in domestic consumption after the coronavirus pandemic.

The main reason for China's slump is the regime's strict zero-Covid policy.

"China is now paying the economic cost of containing the disease," Aaditya Mattoo, the World Bank's chief economist for East Asia and the Pacific, told the Financial Times.

The sealing off of entire cities, sometimes for weeks, is depressing the consumer climate and burdening companies.

According to data from the National Bureau of Statistics, profits of China's industrial companies shrank by 2.1 percent between January and August compared to a year earlier.

In addition, China's real estate sector, which accounts for about 30 percent of economic activity, is in a serious crisis.

There is a high risk that the paralysis will spread to other sectors of the economy, especially the banking sector.

Beijing must give needy construction companies more liquidity support.

The Chinese government itself has set a growth target of around 5.5 percent for this year.

But the target seems more and more unrealistic.

In the USA, there are increasing expert opinions that the People's Republic's growth cycle, which has been going on for almost 40 years, has passed its peak - which also increases the danger of a military conflict in the Pacific.

Contrary to what is often assumed, it is not rising powers that start wars, but those whose rise is reaching its limits and whose regimes fear that time is running out.


Source: spiegel

All business articles on 2022-09-27

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