The international environment has changed radically since the 2008 global financial crisis, which reduced the global economic growth rate from 3.84 percent in 2007 to 1.58 percent in 2008.
Although the global economy recovered slowly after 2010, its growth rate from 2011 to 2019 was lower than that before the global financial crisis. In particular, the average growth rate of the developed economies from 2011 to 2019 was only 1.87 percent, far lower than the 2.71 percent from 1990 to 2007.
In 2018, the Donald Trump administration further hampered the already weak global recovery by launching a trade war against China. And while the world was still struggling to come to terms with the effects of the trade war, the COVID-19 pandemic broke out in 2020, reducing the global output by 3.5 percent, a decline far greater than that during the global financial crisis.
Worse, even before the pandemic could be effectively contained globally, the Ukraine-Russia conflict has broken out, dealing another serious blow to the world economy.
Indeed, China’s external environment has deteriorated to extreme extents.
Although the pandemic’s impact seems to be weakening, there has been little change in the pandemic-related restrictions. For example, the restrictions on cross-border movement of people will continue to curb the recovery of the service industry in countries across the world, especially because the possibility of more contagious and deadly variants of the novel coronavirus emerging cannot be ruled out.
But as people adapt to the pandemic, increase in vaccination rates, and countries’ anti-pandemic measures policies mature, the impact of the epidemic on the global economy is expected to gradually decrease, unless a new outbreak that is difficult to control occurs.
What China should be more worried about, however, is the Ukraine crisis, because it will have a huge impact on global trade and supply chains, the world economy as a whole, in the short term. Its impact on the supply of energy, agricultural products, and key manufacturing components and global shipping will be far greater than that of the pandemic. Not to forget that Western countries are trying to kick Russia out of the global trading system and industrial chains, and fragment the world economy by imposing all sorts of sanctions on Moscow.
The Ukraine crisis has caused global energy prices to surge and increased the risk of stagflation in a number of countries. It has also strained the supply of agricultural products, delayed the spring farming season in some countries, hurt global fertilizer production and sales, and intensified the food crisis in some countries. And the reduced supply of basic raw materials and core manufacturing components and the problems in the high-tech upstream industries, owing to the crisis, have disrupted the global manufacturing chains.
China cannot be immune to such turbulence in the global economy, whose effects it might feel through the fluctuations in the supply chains, although the country can still achieve its 5.5 percent growth target for this year by sticking to the right policies.
China is facing a difficult test due to the rising COVID-19 infections, driven by the highly transmissible Omicron variant, which will make coordinating epidemic prevention and control and economic development even more difficult.
But given China’s experience in fighting the novel coronavirus, the impact of the new outbreaks should be short-lived. As such, China should pay special attention to the impacts of the Ukraine crisis on global trade and supply chains, because it could put additional pressure on it to achieve the targeted growth rate.
And although China can achieve its growth target as long as its macroeconomic policies are sound, it should further stabilize foreign trade policy and make more efforts to strengthen the supply chains of different industries.
The author is a researcher with the Institute of World Economics and Politics of the Chinese Academy of Social Sciences.
The views don’t necessarily represent those of China Daily.
If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at firstname.lastname@example.org, and email@example.com.