February 5, 2023

China’s growth is slowing due to fears of an epidemic

BEIJING – A year after leading the world economy from an epidemic, China’s growth is now beginning to equalize as the world tries to digest whether the country’s recovery will continue or exit.

Symptoms are mixed, showing signs of both weakness and strength for consumers and companies. The rising cost of raw materials eats away at the profits of factories and retailers, while exports remain strong. People shop more, but small businesses suffer. The current uncertainty of the epidemic is above all else.

China said on Thursday that its economy grew 7.9 percent from April to June compared to the same period last year. Although that speed is still stronger than many countries, it is very slow 18.3 percent jump Economy made in the first three months of the year.

China’s final path will be to watch the world closely. If China’s economy slows further, it could drag on the rest of the world economy. Many countries now rely on Chinese factories and consumers. If China continues to get stuck, it could mean a continued recovery for the United States and other countries.

The Chinese government has sent a series of recent signals that economic growth may be in trouble. Prime Minister Li Keqiang held three high-level meetings on the health of the economy last week, and after each of them issued statements, ordering a blizzard of measures to sustain growth.

The most important of these measures is the policy change of the Central Bank. Central Bank of China Moved to help small businesses get credit; Commercial banks will be able to hold slightly smaller cash reserves starting Thursday. In theory, this would free banks from lending more, which would trigger business investments and consumer spending.

But the country’s economy is reeling under a mountain of corporate and home debt. Beijing has begun to tolerate some bond defaults, and it has recently pointed out the possibility Some state-owned companies should not be helped Pay off their debts in full.

China Beige Book, a quarterly survey of businesses across China, has found in recent weeks that many borrowers, especially retailers, are wary of taking out. Loans. Companies fear they may not be able to repay the extra debts.

Recent data may indicate limitations for China’s post-epidemic recovery. According to a Barclays Bank study, China is expected to settle at 5 to 5.5 percent in the new annual growth range. Although significantly better than the growth of most Western countries, it is slower than the 6 to 6.5 percent growth that China saw before the epidemic.

“At home, the economic recovery is unbalanced,” said Liu Ihua, a spokesman for China’s National Statistics Bureau. “More efforts are needed to strengthen the foundation for a smooth recovery of growth.”

Li Yu And Liu Yi Contributing research.