As China reels from its COVID-19 lockdown efforts, its leaders are scrambling to stay ahead of the United States on economic growth.
Chinese President Xi Jinping held meetings with his top economic officials over recent weeks and pushed them to undertake bolder stimulus measures to stem China’s economic bleeding and demonstrate its system is superior to the West’s, the Wall Street Journal reported.
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“The sustained recovery in China’s economy remains unchanged. The fundamentals sustaining China’s sound economic growth in the long run remains unchanged. And the Chinese economy’s features of great potential, full resilience, strong vitality, and enormous space remain unchanged. We are fully capable and well-positioned to overcome difficulties,” China’s Foreign Ministry spokesman Wang Wenbin declared at a recent press conference.
During the final quarter of 2021, the U.S. topped China’s quarterly growth rate for the first time in nearly two decades, according to the Biden administration. U.S. GDP grew 5.5% compared to China’s 4%. This raised alarm bells inside Beijing, but recent economic news, such as downgraded GDP forecasts from major financial institutions, have proved even more worrisome for the communist leaders.
In response, Chinese officials are considering massive new construction projects to reinvigorate key sectors of its economy, according to the Wall Street Journal. This approach mirrors China’s strategy during the onset of the Great Recession of 2008 in which Beijing ramped up public spending to stave off blistering global economic headwinds.
Additionally, local governments in China have begun rolling back restrictions on home purchases, and top officials are considering meetings with foreign investors to ease concerns over the country’s recent crackdowns on businesses, the outlet reported. China is aiming to achieve a 5% growth rate for the second quarter to put it in a position to achieve its annual GDP growth goal of 5.5%, according to the outlet.
Despite China’s “zero COVID-19” approach posing major obstacles to its economic objective, Beijing has given no indication it plans to retreat. Instead, officials are focusing on measures such as new construction projects to ease the pandemic woes.
Last week, the International Monetary Fund downgraded its GDP forecast for China to 4.4% from 4.8%. This was the second time the IMF lowered its expectations for China this year. In October, the group projected China would attain 5.6% growth in 2022. For comparison, the U.S. annual GDP grew 5.7% in 2021, topping 3% annual growth for the first time in a decade as the economy came roaring back from the pandemic. China grew 8.1% last year.
Other financial institutions have also begun lowering their expectations for China as its lockdown in Shanghai, a critical port city and China’s most populous urban hub, beats down the nation’s industrial output and disrupts global supply chains. Shanghai is currently in its fourth week of lockdown.
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The timing of China’s economic woes presents challenges for Xi, who is widely expected to pursue a third term in office when the Chinese Communist Party’s National Congress convenes in the second half of the year.
Many economic experts in the West have long expressed skepticism about China’s economic numbers. One 2019 analysis by the Brookings Institution concluded China’s economy was roughly 12% smaller than official figures.
