Nay Pyi Taw [Myanmar], September 24 (ANI): While China continues to claim that it is steadily recovering from the coronavirus-induced economic slump, the analysts have opined that it will be a hard job for the policymakers in Beijing to maintain a stable economic expansion in the coming years.
In an article in The Irrawaddy, Yan Naing, pseudonym of a regular observer on Myanmar affairs, said that for the first time since 1976 China, in the first quarter of this year, had openly acknowledged an economic downturn. The country recorded its lowest GDP growth in almost half a century in 2019, at 6.1 per cent, and 2020 is worse.
Naing said, “On April 17, the National Bureau of Statistics had announced that the economy contracted by 6.8 per cent compared to the same period a year earlier. Surprisingly, during the annual National People’s Congress of the Chinese Communist Party (CCP) on May 22, no GDP growth target was announced for the first time in 30 years.”
The author said that the officials have cited “great uncertainty” due to the COVID-19 pandemic, which can be seen as an acknowledgment of the steep challenges the country faces amid a struggling economy and increasing international hostility.
Naing said that the COVID-19 pandemic cannot be blamed for this meltdown as it merely aggravated the difficult situation China‘s economy was already in, but which the CCP has sought to camouflage with its propaganda.
Recently, large banks such as the China Construction Bank and the Bank of China announced their biggest profit declines in a decade. According to the official figures, the drop in GDP is at 6.8 per cent, though the actual figures are likely to be higher, despite–or because of–the government’s USD559-billion (about 736.3 trillion kyats) revival package, The Irrawaddy reported.
Citing reasons for the decline in China‘s economy, the author stated that the reason lies in the fundamental problems with the Chinese economy, which have accumulated over the years: excessive investment, low labour productivity, modest consumer spending and demographic changes.
“In the 1990s and 2000s, China created wealth in a way that was appropriate to that time. Factories grew, producing competitive products for the whole world; miles of bridges and roads were built connecting cities and towns. These in turn created jobs and income-generating opportunities for the population, while expanding the productive potential of the economy. But such methods do not always increase a country’s growth potential: bridges and roads are literally being built “to nowhere”, just like “ghost towns”,” Naing said.
Besides, China has piled up a huge amount of debt, both internally and externally. In 2019, China‘s total corporate, household and government debt rose to USD 40 trillion, which is about 300 per cent of its GDP and about 15 percent of all world debt.
The author said, “Heavy Chinese government borrowing led S&P to revise its estimated debt-to-GDP ratio to 273 per cent. Corporate debt, in particular, is massive, causing a closed loop of bad loans and bank stress. Data suggests that delays are likely in some Belt and Road Initiative (BRI) projects due to the pandemic, including in Pakistan, along with the cancellation of mega projects such as a USD 10-billion refinery by Saudi Arabia, while major powers have declared their intention to “decouple” from China.”
Amid the economic slump, several industries and businesses in China have pulled down their shutters, leading to massive layoffs, slowing wage growth, and growing unemployment. “While the rate of unemployment was 5.3 per cent at the beginning of 2019, the pro-government newspaper Global Times published a forecast as the year came to an end that the situation in 2020 would only get worse, with unemployment rising further and wages falling. The latest reports now point to 80 million workers being jobless post-pandemic; another 8.7 million joined the ranks of job seekers this year,” the author added.
On May 28, Chinese Premier Li Keqiang had admitted that there are more than 600 million people in the country whose monthly income is not even 1,000 yuan, thus suggesting that the worsening situation in China.
Besides, the country is also facing a major food crisis after the recent flood devastated the farmlands, thus pushing the second-largest wheat producer in the world to import. (ANI)
