People being screened for Covid at a testing site in Beijing last November. China's reopening is gathering pace this year. Photo / Gilles Sabrie, The New York Times, File
People being screened for Covid at a testing site in Beijing last November. China's reopening is gathering pace this year. Photo / Gilles Sabrie, The New York Times, File
EDITORIAL:
As New Zealand seeks some good news after its shocker run this summer (or stormmer) it’s hard not to hope that China’s economic reopening could fit the bill.
After a lengthy pandemic lockdown and Covid outbreak, China’s economy is expected to be driven by a surge in consumer spendingafter two years of a slump in demand. Various forecasts expect growth there of around 5 per cent.
Commuters wearing face masks wait for transportation in the central business district during the evening rush hour in Beijing. Photo / Mark Schiefelbein, AP
Experts say that should translate into greater demand for food exports from New Zealand, although increased Chinese consumption boosting commodity prices is likely to be inflationary.
HSBC Asia chief economist Fred Neumann told the Business Herald: “We’d probably put New Zealand into the column of an economy that benefits from China’s rebound, rather than being hurt by it, because of that commodity export angle.”
He added: “China kind of adds a cherry on top, if you will, when it comes to rising food prices, and export prices for New Zealand”.
Xu Sitao, Deloitte’s chief economist for China, also pointed to China’s impact on the supply chain. “China’s reopening should turn the drag into a push this year. So the impact on inflation might be negative because of the improved supply chain.”
Great Asia Executive Dialogue today, in partnership with Deloitte, with stimulating conversation led by Xu Sitao - Chief Economist, Partner, at Deloitte China. Asia Society Australia & Deloitte members & stakeholders were able to provide their perspectives on China's re-opening. pic.twitter.com/qrtJsjyIO9
— Asia Society Australia (@AsiaSocietyAus) March 2, 2023
More normal trade between China and the rest of the world could help the Asian giant’s standing in the world.
China’s relationship with the United States badly needs to chill from a current frenzied level of suspicion. Instead, it keeps hardening further into the dangerous deep freeze of a developing Cold War.
After a promising meeting last November between presidents Joe Biden and Xi Jinping, there’s been a lot of hot air over spy balloons and reheated lab-leak theories blowing between Washington and Beijing. It’s hard for US-China ties to stabilise in this environment and that means less cooperation on global issues such as climate change.
Biden’s administration appears to realise that such reactive paranoia is unhelpful, with national security adviser Jake Sullivan stressing that US agencies have different views about the origins of Covid-19.
White House national security adviser Jake Sullivan. Photo / AP
No governments have been flawless in their handling of the pandemic but Beijing’s controlling approach and defensiveness over the spread of Covid didn’t help outside attitudes towards China.
The question of whether the coronavirus came from a Wuhan market or a laboratory mistake is less important than trying to ensure either possibility is far less likely to reoccur. That would require co-operation rather than finger-pointing about what happened in 2019.
An area of Xi’s leadership that will need to be watched carefully is how he wields China’s influence in Russia’s war in Ukraine.
China appeals as the one major country with a chance of moving the conflict towards a diplomatic solution, given its alliance with Russia and established ties with countries backing Ukraine. While it has refused to condemn the invasion, China up until now hasn’t bent the lever for Moscow either.
On the anniversary of the invasion, Xi has released a vague peace plan and is to hold talks with presidents Vladimir Putin and Volodymyr Zelenskyy. He has met with Russian ally Belarus. Perhaps this effort might result in Ukraine-Russia talks.
Belarusian President Alexander Lukashenko, left, and Chinese President Xi Jinping attend a welcome ceremony held at the Great Hall of the People, in Beijing. Photo / AP
The US has claimed that China plans to supply Russia with the weapons that Putin needs as Ukraine has been promised extra Western aid and is in a better overall position. Xi becoming Putin’s cavalry would mean a devastating escalation.
Burning bridges with Western countries that China has trade and political ties with would be extremely counter-productive but it’s a scenario that the Taiwan dispute raises too.
Soldiers line in formation as Taiwan President Tsai Ing-wen inspects them at the Penghu Magong military base in outlying Penghu Island. Photo / Chiang Ying-ying, AP
Arms support for Russia would seem unlikely while China is attempting to broker peace.
The best strategic outcome for China would be for Russia to limp out of this conflict in a face-saving way and recover, so Beijing still has a useful ally in its competition with the US.
And the other major consideration is the global cost the conflict is taking. No countries need the fallout of yet more sanctions. The peace plan refers to the impact on grain exports and supply chains.
The war’s end would remove a huge drag on the world economy just as China is trying to rebound and recover its status as the chief supplier to all.
Maybe economic calculations will bring out the better side of China this year.
