Invasion of Ukraine: World Bank cuts Chinese growth estimates
From +5.4% to +5%, in line with other East Asian countries. Prolonged conflict leads to 4% GDP increase. The war pushes up inflation. The situation worsens a picture already marked by the return of the Covid-19 pandemic. 16 million new workers in search of employment this year in China.
Beijing (AsiaNews) - Due to the Russian invasion of Ukraine, the World Bank has cut China's growth estimates. The international financial institution forecasts China's gross domestic product will increase by 5% this year, down from the +5.4% estimated before the outbreak of the Russian-Ukrainian conflict.
The Asian giant's figure is in line with that which the World Bank attributes to East Asia and the Pacific region. However, the Chinese government has set a growth target of 5.5% for this year: failure to meet it represents a political problem for Xi Jinping, who is expected to be granted a third, "historic" mandate in power by the 20th Chinese Communist Party Congress in autumn.
The World Bank forecast confirms the perplexity of various experts in the face of the growth levels announced by the Beijing leadership. With a prolongation of the conflict in Ukraine, China's GDP growth could fall to 4%, the Washington-based institute argues.
The impact would be greater without the economic stimuli decided by the Chinese authorities. The shock of the war in Ukraine affects China's economic activities because it has brought an increase in food and fuel prices, fostered financial volatility and reduced global confidence.
World Bank researchers note that the Ukrainian crisis exacerbates an already difficult economic situation in China, marked by the return of the Covid-19 pandemic, a structural slowdown in GDP growth and inflation that is expected to rise rapidly.
The country is facing triple pressures: falling domestic demand, with consumption not taking off; disruption of global trade chains; and weakening expectations for the future. In response to these challenges, the central government has enacted tax cuts for businesses (especially small and medium-sized ones), eased restrictions on the real estate market, and supported infrastructure investment by provincial governments.
As reported by Caixin, the issue haunting Chinese leaders is employment. Beijing wants to reduce the share of people without employment to less than 5.5 percent-a more ambitious goal than 2021.
Last month at the annual session of the National People's Congress, Premier Li Keqiang said the government expects 16 million new entrants into the labor market this year. Of those, nearly 11 million are recent graduates seeking skilled jobs. Analysts note, however, that the crackdown on hi-tech companies, private after-school institutions and real estate groups limit the executive's ability to maneuver on the labor front.
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