Xi warns of threats to global recovery
China’s growth slows, Credit Suisse chair quits after breaching quarantine rules, Dress codes for pandemic professionals
Xi Jinping today warned of “serious negative spillovers” if “major economies slam on the brakes or take a U-turn in monetary policies”.
The Chinese president, who was talking to global leaders by video at the World Economic Forum, warned against protectionism and called for greater co-ordination on global economic policy in the face of surging inflation, supply chain threats and tight energy supplies. “These risks compound one another and heighten the uncertainty about economic recovery,” he said.
Xi also spoke of the need to strengthen co-operation on medicines and address vaccine inequality.
The Chinese president’s remarks follow new data revealed earlier today that show the country’s recovery is continuing to lose momentum, with growth slowing to its lowest level in 18 months in the final quarter of last year, under the “triple pressure of demand contractions, supply shock and weakening expectations”.
China’s economy expanded 4 per cent in the final quarter of 2021, compared with the same period in 2020 — a better than expected headline figure, but down on the 6.5 per cent growth in the same period the year before. The People’s Bank of China also cut an important lending rate for the first time since April 2020.
One of the reasons for the slowdown is the country’s “zero-Covid” policy of lockdowns and restrictions to contain infections in the run-up to next month’s Winter Olympics. The policy is exacerbating supply chain problems in Xi’an, Tianjin and other parts of the country that host manufacturing facilities.
According to the FT’s Lex column, today’s data also highlight one of China’s key economic weaknesses: the drop in domestic consumption caused by the zero-Covid policy.
Exports accounted for just a fifth of the country’s 2021 GDP growth, while household consumption was two-thirds, it says, suggesting Beijing may not be able to afford to trade economic growth for the international prestige of the Games.
The country’s Covid policies also threaten Hong Kong’s status as a global financial hub. As our Big Read explains, the city’s strict quarantine measures have meant a low death toll from the virus — 213 people out of a population of 7.5m — but have caused severe disruption to business.