China’s COVID Plan Could Hijack Their Economy — And Ours
(RightWing.org) – Earlier in October, the 20th National Congress of the Chinese Communist Party (CCP) met to reorganize and establish new leadership. President Xi Jinping was elected to an unprecedented third five-year term, and loyalists close to him were put in key positions in the Politburo and the government. That means there will be little challenge to his COVID lockdown policies, which are heavily weighing down the country’s economy.
The Chinese president told the members of the National Congress how his zero-COVID policies would continue to stop the spread of the virus. While the scheme is causing significant financial challenges within the country, it also impacts the global economy, including the United States.
China’s Economy Is in a Coma
China’s gross domestic product (GDP) fell below expected targets for the third quarter. The second-largest economy in the world, behind the US, saw its GDP expand only 3.9% year over year. It was short of the country’s target of 5.5% — the lowest in 30 years. In the second quarter, economic growth was only 0.4% as major cities across the country were in lockdown mode.
Experts say the bad news results from consumers facing lockdowns as the government tries to reduce the spread of COVID-19. Nonetheless, the CCP appears prepared to continue with the draconian lockdowns regardless of any consequences.
Chief China economist at research firm TS Lombard, Rory Green, said the zero-tolerance COVID policy led to an “economic coma.” Combined with inflation and energy challenges caused by the Russian war on Ukraine, significant monetary hurdles could be presented to the global economy in the weeks and months ahead.
Supply Chain Challenges Cause Ripple Effects
Xi’s lockdown policies have also contributed to a property crisis, as sales are down 22%. Additionally, new construction has decreased by 38%, and investment has dropped 8%. That’s not all… China’s currency has also weakened, causing its stock market to lose 34%, accounting for the renminbi’s decline compared to the dollar.
The zero-COVID policy is causing a drag on the global economy. It could impact commodities and numerous technology products, which include computer chips. It could also hit European exports hard with goods such as luxury items and cars.
The International Monetary Fund (IMF) reported earlier in October how the communist country’s lockdowns would contribute to challenges in the global supply chain as well as trade. Additionally, the IMF said China’s troubled property sector could cause significant problems for the international financial system.
Now that Xi has secured another term, experts say he has no reason to lift his zero-COVID policy. They say there is unlikely to be any relaxation of the policy before 2024. With large-scale lockdowns still a real possibility in China, can the global economy absorb the economic impact?
Only time will tell.
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