The restrictive corona measures are causing the Chinese economic engine to stutter. The once flourishing economy is struggling with weak growth in gross domestic product. The regime in Beijing is now even avoiding speaking of a growth target at all.
China is increasingly abandoning its growth target for the economy this year. The People's Republic will work hard to achieve the best possible outcome for the economy this year, state media reported after a high-level meeting of the ruling Communist Party. Most recently, on the other hand, calls were made to achieve the growth target for this year of around 5.5 percent.
Experts now assume that this goal is no longer realistic for the world's second largest economy after the USA, given the tough corona lockdowns in cities like Shanghai. The 25-strong Politburo met for a meeting to discuss the economic situation. In the second half of 2022, China should "stabilize employment and prices, keep economic activities within reasonable limits and strive to achieve the best possible results," state-run Xinhua News Agency reported after the meeting. The growth target was not mentioned.
China's economic engine has been sputtering lately, fueling fears of a global economic slowdown. Mainly because of the tough corona lockdowns, the gross domestic product (GDP) in spring only increased by a meager 0.4 percent within the year. Excluding the shock from the outbreak of the virus pandemic in early 2020, this was the lowest growth since data collection began in 1992.
"The middle class is increasingly feeling the effects, for example through stagnating incomes or falling real estate prices. This increases the political pressure on the government to find solutions," commented Max Zenglein from the Berlin China Institute Merics on the economic situation in China in mid-July. The weak growth amplifies problems in the financial system. Without a significant upswing, an increase in payment defaults is to be expected in the coming months. Economists expect the Beijing authorities to try harder to stimulate the economy.
