WASHINGTON/BEIJING: China has an important part to play in the global economy as it recovers from COVID-19, but its growth is slowing, IMF Managing Director Kristalina Georgieva said Monday. The head of the Washington-based crisis lender held a virtual meeting with Chinese Premier Li Keqiang and discussed topics ranging from inflation to the recovery from the pandemic, according to a statement released by the IMF. “China achieved a truly remarkable recovery, but its growth momentum has been slowing notably. As China is a vital engine for global growth, taking strong actions to support high-quality growth will help not only China, but the world,” Georgieva said.
In October, the IMF lowered its forecasts for China’s growth due to an accelerating pullback in public spending, predicting an eight percent expansion this year and 5.6 percent growth in 2022. While the 2021 figure is Beijing’s strongest rate of growth since 2011, analysts warn China is facing a painful fallout from real estate weakness and shocks from surging coal prices and shortages.
Georgieva added that Beijing had made “important contributions” to expanding vaccine access so the world can achieve the IMF’s goal of inoculating 40 percent of the population of each country against Covid-19 by the end of this year and 70 percent by the middle of next. With China embroiled in an ongoing spat with the United States, Georgieva said countries need “to cooperate to reduce trade tensions and strengthen the multilateral trading system, which is a key engine for growth and jobs.”
The IMF is pushing the G20 group of the world’s richest countries, including China, to extend and improve their debt relief initiative, warning last week that many countries face a dire crisis without the help. The group’s Debt Service Suspension Initiative (DSSI) expires at the end of the year, and Georgieva said she “welcome continued engagement with China on” the G20’s Common Framework that continues some of the relief.
China’s export growth
Export growth in China lost some steam in November as holiday demand from abroad faded, official data showed yesterday, but demand for overseas fuel pushed up imports to spike above expectations. Strong exports have helped to boost growth in the world’s second-largest economy since mid-2020, with China containing domestic outbreaks through tough lockdowns and mass testing-after the coronavirus was first detected in the central city of Wuhan.
Despite recent power outages caused by emissions-reduction targets, the surging price of coal, and supply shortages, factories kept the goods flowing and the power crisis has been winding down. But experts have warned that the export boom is likely to fade as the world gradually returns to normalcy. In November, exports rose 22 percent on-year, better than analysts expected but below the 27.1 percent growth clocked in October, according to the latest customs data.
A recent report by ING said Chinese exports likely slowed “given that most orders for western holiday demand have been fulfilled”. Imports, however, rose an unexpected 31.7 percent-well above the 21.5 percent increase tipped by a Bloomberg consensus poll. “The surprisingly high number comes from contributions of coal, natural gas and crude oil imports… it’s basically to meet the domestic demand for energy,” said Zhaopeng Xing, senior China strategist at ANZ Research. Given that China still has limited energy capacity and will need time to build it up, energy-related imports will continue in the coming months, Xing told AFP.
With most other countries opting for a strategy of living with COVID-19 and reopening economies, demand for protective gear and work-from-home products could shift to services, Nomura chief China economist Lu Ting earlier said. Yesterday, official data showed that China’s total trade surplus was $71.7 billion in November, down from $84.5 billion the month before. – AFP