With its growth engine spluttering, China has adopted a rather unambitious goal for its economy in 2022. It is seeking “stability”, writes Stephen Bartholomeusz | auschina chinaecon | OPINION
With its growth engine spluttering, China has adopted a rather unambitious goal for its economy in 2022. It is seeking “stability.” In a potentially ominous signal to Australia’s iron ore miners and LNG producers, it is also seeking a “strategic baseline” to ensure self-sufficiency in energy, grains and minerals, with a “safety line” for imports that can’t be exceeded.
The performance of China’s economy has reflected the policy upheavals and external volatility. It started with a bang as the economy bounced back from the pandemic. First-quarter GDP was 18.3 per cent higher than for the same quarter of 2020. In the June quarter, however, it slowed to 7.9 per cent and then to a meagre 4.9 per cent in the third quarter. It may be below four per cent in the December quarter.
While the economic meeting maintained the tough line Beijing has taken towards the property sector the emphasis on stability suggests that the waves of “reforms” may be over and fiscal stimulus is back on the agenda. Apart from the impact of currency divergence on China’s $US1,05 trillion of US Treasury bond holdings there would be a risk that the foreign capital that poured into China when its economy was powering out of the pandemic at the start of this year would flood out to avoid the losses from a weakening currency and in pursuit of the rising yields and currency gains elsewhere.
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