China’s 2022 plans come with one eye on US policies, pandemic’s evolution, former central bank adviser says
- Yu Yongding is on Team Transitory when it comes to inflationary pressure, and the prominent government adviser dismisses risk of stagflation
- Western countries’ cautious handling of the stimulus exit appears to have lowered market expectations for a new ‘taper tantrum’
US policies and the evolution of the coronavirus pandemic will be instrumental in dictating how the Chinese and global economies will fare next year, a prominent Chinese government adviser said on Friday.
His comments come as Beijing prepares to draft its economic policies for the new year, with issues such as the Federal Reserve’s taper plan, inflation, global economic recovery and US relations likely to dominate the outcome of new policies.
“The biggest uncertainty lies in the coronavirus pandemic,” Yu said during a Caixin Summit panel discussion. “There could be some inflationary pressure next year, but it is a transitory, not stagflation.”
Chinese authorities are now busy trying to contain coronavirus outbreaks in Beijing, Dalian and Chengdu, as the central government continues to maintain a zero-tolerance approach to the pandemic, thus heaping pressure on the country’s economic growth and international exchanges.
However, the government adviser warned of great uncertainty over bilateral relations and the US’s macro policies.
“We don’t know what kind of policies the Biden administration will implement,” he added.
Nicolas Chapuis, the European Union’s ambassador to China, also echoed concerns over the pandemic and warned of more trade and supply-chain disruptions, during his speech at the summit.
“The whole world will be kick-started if China opens its borders.”
Exports of frozen food to the United States and Europe ahead of the Christmas holiday are at risk. However, other cold-storage hubs, including those in Shanghai, remained unaffected.
In the face of China’s economic slowdown; its crackdown on big tech companies and after-school tutoring businesses; and the Evergrande debt crisis, Yu said some overseas investors have exaggerated the problems in Chinese financial markets.
“China’s financial markets are, overall, controllable,” he said. “Foreign investors don’t need to worry too much.”