China’s economy must finally turn around

The Chinese government expects the Chinese economy to recover strongly in the third quarter. That said the head of the powerful Reform and Development Commission (NDRZ) at the Communist Party congress in Beijing on Monday. “The economy really recovered in the third quarter,” said Zhao Chenxin.

He acknowledged this year “difficulties and challenges” and “greater than expected shocks”. There have been some monthly fluctuations due to the external environment, the pandemic, extreme weather and other unexpected factors, the top economic leader said. But overall, the second-largest economy is on the recovery track. They also show great resilience.

In particular, the restrictions imposed by China’s strict zero-covid strategy of lockdowns, mass testing and quarantines are slowing the economy. As the rest of the world tries to live with the virus, China’s leadership remains committed to nip any outbreak in the bud. The zero-tolerance target is becoming increasingly difficult to achieve due to the new variants, which spread more easily.

«The Chinese economy is relevant to the Swiss economy»

Switzerland would also be hit by a long-feared Chinese economic crash. Beijing is an important trading partner for Bern and Switzerland has been the only Western European country to have a bilateral free trade agreement with China since 2014. Today, more than 1000 Swiss companies are active in the Middle Kingdom. «Many components for production in Switzerland come from China. The Chinese economy is relevant to the Swiss economy,” says economic expert Ruedi Nützi (65).

In the second quarter, the economy grew by only 0.4 percent. Experts now expect an estimated 3.5 percent in the third quarter. The government will fall far short of its original growth target of 5.5 percent for this year. But the turnaround would be a fact – and that would be good news for Switzerland too. The statistics office in Beijing will release the new figures for the third quarter on Tuesday.

The World Bank currently forecasts 2.8 percent for the full year in China. That would be only the second time in four decades that China’s growth has been so low, after the first year of the 2020 pandemic.

“For the first time since 1990, the rest of Asia is growing faster than China,” said Jörg Wuttke, head of the EU Chamber of Commerce in China. He pointed out that other Asian countries were treating Covid-19 “fundamentally differently” and had “returned to normal”. According to the World Bank, the region excluding China is expected to grow by a total of 5.3 percent this year. (SDA)