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Tags: inflation | global | economic | policy | davos | world economic forum | xi jinping

China's Xi Jinping: Inflation Is a Threat to Global Recovery

President Joe Biden shakes the hand of China's Xi Jinping when Biden was vice president
President Joe Biden shakes the hand of China's Xi Jinping when Biden was vice president. (Lintao Zhang/AP)

By    |   Monday, 17 January 2022 10:48 PM

President Xi Jinping has warned the swell of inflation is threatening global economic recovery and placing "tremendous pressure" upon China, The Telegraph reported.

Speaking at the Davos summit, the leader of the world's second-largest economy said the world is "emerging from the depth, yet it still faces many constraints" after the low inflation environment "notably changed."

Xi, appearing online for the second year for the summit, called for coordination on global economic policy.

"If major economies slam on the brakes or take a U-turn in the monetary policies, there would be serious negative spillovers," Xi stated. "They would present challenges to global economic and financial stability, and developing countries would bear the brunt of it."

The Chinese president has insisted his nation's economy will remain resilient amid headwinds but cautioned, "shifts in the domestic and international economic environment have brought tremendous pressure."

"The fundamentals of the Chinese economy are unchanged; it remains resilient, has sufficient potential, and its long-term prospects are positive," Xi said.

Xi's comments come as China has unveiled further economic support to fight omicron while property market woes and a zero-COVID strategy have slowed the country's growth to its weakest pace in 18 months. And economists believe China's economy will be hit hard by the infectious omicron strain as it stands to test the zero-COVID strategy to the limit.

Additionally, experts believe the country's Sinovac vaccine is less effective against omicron than its western counterparts, but China will still persist with a zero-COVID policy.

And Oxford Economics' Louis Kuijs has warned pressure on growth due to China's COVID-19 policies is likely to continue this year.

"China is unlikely to relax its zero-tolerance approach to COVID until late 2022 at the earliest," Kuijs said. "As a result, we project disappointing consumption growth this year, especially in the first half.

On top of COVID, trouble in the property sector spurred on by the crisis earlier this year at Evergrande has added additional weight for the Chinese economy to carry, according to the report.

Economist Hao Zhou at Commerzbank said Chinese growth would face "tremendous pressure" in the short term, suggesting Beijing would likely unveil more economic support.

"While the policy easing might help ease the slowdown fears, the Chinese economy is still facing significant downside risks due to weak underlying demand," Hao said.

The Telegraph reported "GDP rose by 4% year-on-year in the final three months of 2021, down from 4.9% in the previous three months. Forecasters warned that Beijing's use of draconian lockdowns would mean a tougher year ahead for the world's second-largest economy."

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President Xi Jinping has warned the swell of inflation is threatening global economic recovery and placing "tremendous pressure" upon China, The Telegraph reported.
inflation, global, economic, policy, davos, world economic forum, xi jinping
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2022-48-17
Monday, 17 January 2022 10:48 PM
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