China says economic recovery ‘tortuous’ but Western critics will be ‘proven wrong’

CHINA said on Wednesday (Aug 16) its economic recovery “will be a bumpy and tortuous process”, but insisted Western critics “will for sure be proven wrong”.

The comments follow a raft of recent figures that have stoked concerns over China’s stuttering post-Covid recovery, and after US President Joe Biden said the country’s mounting economic problems made it a “ticking time bomb”.

“After the smooth transition of the epidemic prevention and control, China’s economic recovery is a wave-like development and a tortuous process, which will inevitably face difficulties and problems,” foreign ministry spokesperson Wang Wenbin said at a regular news conference.

“A number of Western politicians and media have hyped up the periodic problems in China’s post-epidemic economic recovery process. But eventually, they will for sure be proven wrong,” he added.

Retail sales, a key gauge of consumption, grew 2.5 per cent year-on-year in July, the National Bureau of Statistics (NBS) said on Tuesday, down from 3.1 per cent in June and falling short of analyst expectations.

The NBS also said it would no longer release age-specific unemployment data, citing the need to “further improve and optimise labour force survey statistics”.

The decision sparked a social media backlash on Tuesday, with Internet users accusing the authorities of attempting to hide the extent of rising youth joblessness.

Unemployment among 16- to 24-year-olds hit a record 21.3 per cent in June.

Overall unemployment rose to 5.3 per cent in July compared with 5.2 per cent in June, while industrial production grew 3.7 per cent in July from a year ago, down from 4.4 per cent in June

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Chinese leaders have sought to boost domestic consumption in recent weeks, with the State Council releasing a 20-point plan last month to encourage citizens to spend more in sectors including vehicles, tourism and home appliances.

The country’s top brass has warned that the economy faces “new difficulties and challenges” as well as “hidden dangers in key areas”.

“But we never shy away from problems, we have taken proactive measures to solve problems, and the results have been or are being seen,” the foreign ministry’s Wang said.

Time bomb

Recent data suggests China may struggle to achieve the five per cent growth target it set for the year, with the economy growing just 0.8 per cent between the first and second quarters of 2023, according to official figures.

Speaking at a fundraising event last week, Biden had pointed to the country’s high unemployment and ageing workforce, saying “China is in trouble”.

The world’s second-largest economy slipped into deflation for the first time in more than two years in July, due to waning consumption and flagging exports.

While cheaper goods may appear beneficial for purchasing power, falling prices can actually lead to decreased demand, fuelling a vicious cycle that drags down the wider economy. AFP