Concerns have been raised over China’s approach toward its national economic policy. China is suffering from mediocre economic growth, and the issue was neglected during the Chinese Communist Party’s recently concluded 20th National Congress. Experts have suggested that such negligence by China can severely impact Canadian businesses.
China, on October 24, announced that its GDP (Gross Domestic Product) had risen 3.9 per cent in the third quarter as compared to the same period in 2021. China’s current GDP figure is below its growth target of 5.5 per cent. Moreover, according to experts, China needs to attain a growth rate of 8 per cent to support its economic growth. Notably, China postponed releasing its GDP figures on October 18.
How fast can China’s economy bounce back from coronavirus lockdown?
When will China’s economy turnaround?
The biggest question for the global economy right now is how quickly China can get back to anything like normal operations while it’s battling the coronavirus outbreak that has killed almost 1,900 people and sickened tens of thousands.
Government controls and people’s fears to go outside have decimated spending for businesses from local noodle joints and Starbucks stores to Alibaba delivery men. Meantime, many factories are still not working due to a lack of staff, with workers trapped in their hometowns or spending two weeks in quarantine.
Out of action
China’s economy was likely running at just 40 per cent-50 per cent capacity last week, according to a Bloomberg Economics report. The following data tracks how much of the world’s second-largest economy remains out of action:
About the same number of trips by planes, trains, automobiles and boats was taken in the run up to the Lunar New Year this year compared to last year, but the fall off since the first day of the Year of the Rat on Jan. 25 has been stark. On average, there’s only about 20% as many trips being taken each day, meaning millions of people still haven’t traveled back to work. And with long-distance buses only allowed to operate at 50% capacity to reduce the risks of viral transmission, that backlog will take a long time to clear.
Industrial demand hit
Although some companies, especially large state-owned industrial firms and those making medical equipment, have ramped up output, demand for electricity is still well below where it should be at this time of year. Along with anecdotal reporting from across China’s vast east-coast manufacturing heartland, the power numbers suggest much of the nation’s industrial capacity remains idle.
Emissions of nitrogen dioxide in the week after the holiday were 36% below where they were at the same point after the new year break in 2019, according to the Centre for Research on Energy and Clean Air, which cited satellite data. A slowdown of 25%-50% across industrial sectors such as oil refining, coal-fired power generation and steel production contributed to the drop, according to the independent research organization.
Back to work
A survey of 109 American manufacturing companies in and around Shanghai showed that although almost 70% were operating last week and more than 90% expected to be back by this week, 78% of firms said they didn’t have sufficient staff to run a full production line.
Co-founder of Intercedent, an Asia-focused business advisory firm, John Gruetzner, stated that China delayed releasing its GDP figures to keep it out of headlines during the congress. According to Charles Burton, a former counsellor at the Canadian Embassy in China, the struggling Chinese economy can be “disturbing for Canadian business”. He said that China’s housing crisis and zero-COVID policy had hurt the country’s economy the most.
On October 12, Deputy Prime Minister of Canada, Chrystia Freeland, asked Western democratic countries to give preferences to trade among themselves and limit business interactions with countries, like China and Russia, that are working against their values. These points can be well-adjusted in Canada’s upcoming Indo-Pacific policy.
1). What was China’s GDP growth rate for the third quarter of this year?
China’s GDP growth rate for the third quarter this year was 3.9 per cent.
2). Who is Chrystia Freeland?
Chrystia Freeland is the deputy prime minister of Canada.
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