China’s economy shows signs of stagnation and threatens to slow global growth

File photo of workers moving imported soybeans from the US in the port of Nantong, in the Chinese province of Jiangsu (REUTERS) (CHINA STRINGER NETWORK/)

China’s economy is facing a period of slower growth and this threatens to slow the global recovery after the pandemic. Partly, This is due to Beijing’s zero-tolerance approach to curbing the spread of COVID-19.

Now, as reported by Wall Street Journal some economists believe that the Asian giant is approaching a recession, something the country has not experienced in decades. However, China has some tools to avoid reaching that scenario. For example, increase public spending so that the economy grows.

Factory activity contracted at a more pronounced pace in Aprilat a time when the widespread lockdowns by COVID-19 reduced production and disrupted supply chains, an official survey showed on Saturday.

The official manufacturing Purchasing Managers’ Index (PMI) fell to 47.4 in April from 49.5 in March, to a second consecutive month of contractionsaid the National Bureau of Statistics (NBS). The 50-point mark separates contraction from growth on a monthly basis.

Dozens of China’s major cities are in full or partial lockdowns, including the commercial center of Shanghai, leading more analysts to lower growth forecasts for the world’s second-largest economy.

Before this panorama, millions of recent graduates struggle to find a job. Business confidence has fallen, imports have plummeted and the Chinese are saving more, it reported. The Wall Street Journal.

But not only the zero tolerance policy against COVID-19 has affected China, now the war in Ukraine raised costs for Chinese companies and decreased demand for their exports. In addition, the real estate sector entered a sharp decline last year.

The problem not only affects China, since the slowdown in its economy will be felt worldwide. According to the International Monetary Fund, the Asian giant would represent a quarter of economic growth worldwide until 2026.

FILE IMAGE.  People wearing masks walk near the headquarters of the Chinese central bank in Beijing (REUTERS / Tingshu Wang)
FILE IMAGE. People wearing masks walk near the headquarters of the Chinese central bank in Beijing (REUTERS / Tingshu Wang) (Tingshu Wang /)

One of the affected countries would be Brazil, which could see decreased demand for products such as iron ore and other metals.. It also affects countries such as Taiwan, South Korea and Japan, which export components and machinery to the Asian giant.

The Ford Motor Co. automobile company announced that its sales fell by 19% in the first quarter from a year earlier in China.

Unemployment levels worry the authorities of the Asian country. Youth unemployment is now 16%, according to official data.

It is too difficult for young people to find work nowadaysJessica Fan, a project manager at an Internet company in China, told The Wall Street Journal.

Big tech companies have laid off employees en masse. On this matter, Fan points out that every time his company advertises a new job, the resumes arrive in his mailbox. “like an avalanche” for weeks.

In China it is estimated that some 10 million college students They will graduate this year. However, according to data collected by experts, There are not enough vacancies in the country for all those people who are trying to enter the world of work for the first time.

According to the research firm J Capital Research, the number of people employed in small and medium-sized businesses has fallen by about 30 percent.

FILE IMAGE.  Workers wearing face masks walk out of their bedroom at an electronics factory in Shanghai (REUTERS/Aly Song)
FILE IMAGE. Workers wearing masks walk out of their bedroom at an electronics factory in Shanghai (REUTERS / Aly Song) (ALY SONG /)

As for the world of finance, Chinese stocks suffered their worst sell-off in more than two years last Monday.

According to Weijian Shan, Chairman and CEO of PAG, China’s economy is “in the worst shape of the last 30 years”.

I also believe that public discontent in China is at its highest point in the last 30 years.Shan added.

“Clearly there is a risk of a standard kind of growth slump,” said Jonathan Ashworth, a Chinese economist at Fathom Consulting in London.

At the end of April, the managing director of the International Monetary Fund pointed out that China should use its fiscal space to stimulate consumptionwhile facing an economic slowdown caused by new lockdowns related to COVID-19.

Kristalina Georgieva argued that China has ample room for fiscal policy Y monetary to counteract the situation, but pointed out that it would be better to stimulate consumption.

What we see in China is that consumption is falling short, it is not recovering with the necessary forceGeorgieva told a news conference at the IMF and World Bank spring meetings.

File photo of a shopping area in Shanghai (REUTERS / Aly Song)
File photo of a shopping area in Shanghai (REUTERS / Aly Song) (ALY SONG /)

“So instead of moving the money to public investments, you have to move it to people’s pockets, so that there is more dynamism coming from a consumption boom.”

Asia remains the most dynamic region in the world, but its economic prospects are “stagflationary”with weaker than expected growth and higher inflation, stressed the International Monetary Fund (IMF).

The IMF revised down its projections for Asia’s GDP growth to 4.9% for 2022 from 5.4% in January, in a context of war in Ukraine, the resurgence of the covid-19 pandemic and the tightening of financial conditions.

Keep reading:

The shocking video that shows the desperation of those confined in Shanghai

Shanghai nightmare: Chinese regime keeps 25 million people confined without access to food and basic products

Shanghai residents rebel against COVID-19 lockdown: videos show looting for food after 22 days of lockdown

The video that shows how the Chinese regime separates children with coronavirus from their parents in Shanghai