Tough lessons from China’s fizzled recovery

INSTEAD of being 2023’s banner economy, China was relegated to the ranks of the also-rans. Rather than roaring back after the draconian Covid-Zero curbs were erased, the country’s recovery quickly fizzled. Prospects for a significant improvement next year are limited in the absence of sweeping efforts to crank up growth – something President Xi Jinping appears reluctant to embrace. There are lessons for everyone in how this former juggernaut came down to earth.

While China’s sub-par rebound will constrain world growth, it doesn’t have to be a disaster. The languishing expansion requires a healthy rethink of the country’s role in global commerce – and what we expect of it. As disappointing as the year has been, Beijing may have done the world a favour. Problems have been building in China’s economy for years, even before the pandemic. But so great was its prior performance, so rapidly did it catapult other major economies, that a merely mediocre performance is a shock.

An annual increase in gross domestic product of about 5 per cent, a goal likely to be met when fourth-quarter numbers are released in coming weeks, is something a lot of advanced economies would usually kill for. Drill down a bit and the picture is far less flattering: retail sales are decent but falling short of expectations, the property sector is mired in difficulties, and consumer and factory-gate prices are declining. An important measure of foreign investment hit a four-year low in November. The National Bureau of Statistics conceded that the recovery leaves a lot to be desired.