According to The New York Times, China’s demographics and economic growth rate are causing the most concerns among businesspeople about whether or not to invest in China (NYT).
However, a rapidly aging population, sluggish productivity growth, high debt levels, and growing social inequality will continue to weigh on the country’s economy, according to the New York Times.
China’s economy is experiencing its worst downturn in history, with economic growth falling to 3% in 2022.
China has enlisted the help of international financial institutions, market analysts, big investment organizations, and think tanks to present an optimistic image of the Chinese economy’s future.
Liu, Vice Premier He also attempted (January 17) to reestablish foreign institutional investors’ confidence in the Chinese economy at the ongoing ‘World Economic Forum’ (WEF) in Davos, by emphasizing that China’s economic growth would return to pre-pandemic levels this year, as the country reopened following the implementation of the “zero-Covid” policy.
The Chinese government announced that its population would fall for the first time in 61 years in 2022. It had already verified that economic growth has fallen to 3%, significantly below the previous decade’s pace, according to the New York Times.
Furthermore, China faced a skeptical audience at the World Economic Forum’s annual gathering, attesting to both the significantly altered geopolitical situation following Russia’s war on Ukraine, as well as two data indicators that revealed a troubling shift in China’s own fortunes.
Liu attempted to convince his audience that China was still a viable economic destination. “If we work hard enough, we are optimistic that growth will most likely return to normal, and the Chinese economy will significantly improve in 2023,” he added.
Liu, a well-traveled vice premier and one of China’s most famous faces in the West, insisted on the “steadiness” of the Covid problem seven weeks after the government unexpectedly abandoned its strategy of quarantines and lockdowns.
According to the New York Times, China has passed the peak of infections and has enough hospital beds, physicians and nurses, and medicine to treat the millions who are ill.
He did not, however, address the 60,000 deaths attributed to the coronavirus after the lockdowns were released, a significant increase in the official death toll reported by China three days earlier.
Furthermore, the population loss reveals the country’s declining birthrate, a trend that experts say was worsened by the epidemic and would harm the country’s long-term prosperity. The 3% growth rate, the second lowest since 1976, demonstrates the stifling effect of the government’s Covid program, according to the New York Times.
The signs of China’s economic fragility are everywhere: the government stated on Friday that exports plummeted 9.9 percent year on year in December.
“China’s exports are slowing, building is in difficulty, and local governments are running out of money,” said Jean-Pierre Cabestan, a political science professor at Hong Kong Baptist University. “China requires the world to help its economy and to follow its return to greater normalcy.”