Editorial | China growth figures reveal need for swift policy responses
- Record annual trade surplus combined with slowing growth at home underlines challenges facing those trying to maintain economic stability
China has just posted a record annual trade surplus with the rest of the world and the United States in particular while recording slowing growth at home. The contrast underlines the challenges facing policymakers in trying to maintain economic stability.
The export surge reflects Covid-19 effects on foreign markets such as social distancing, which stimulated demand for electronics and other domestic consumer durables. But it is not being mirrored at home.
The recovery has been losing steam since the second half of last year, prompting the central bank to cut its two major policy rates by 10 basis points yesterday following easing in December, further evidence of Beijing’s intention to stabilise growth in 2022.
That said, the latest figures underscore the likelihood that as the world comes out of Covid, China may be the only major economy growing in a meaningful way.
The trade surplus is widening so much, as demand for Chinese exports defies the Covid slowdown, that it is looking like the main engine of China’s growth. At the same time China has not increased domestic consumption as much as hoped, nor imported as much from the rest of world.