How Does the Chinese Economy Currently appear after Abandoning Strict "Zero COVID" Policies and Adopting a High-Level Openness Policy?


  • 17-Jan-2024

    How Does the Chinese Economy Currently appear after Abandoning Strict "Zero COVID" Policies and Adopting a High-Level Openness Policy?

    By: Ma’moun Abu Al Seba’
    Executive Director of Talal Abu-Ghazaleh Institute -Confucius
    Head of Arab-Chinese Relations

    Following the Corona Pandemic, numerous reports and economic indicators were issued by Western politicians, institutions and media, with the majority of them exhibiting anti-China sentiment. These reports predicted the collapse of the Chinese economy and its entry into a major crisis from which Beijing would not recover in the near future. These predictions were reinforced by the financial struggle of Evergrand, China’s second largest real-estate developer with operations in 170 local cities, leading the company to face bankruptcy due to its inability to meet loan payments.

    In recent weeks, Beijing published statistical figures indicating its economy’s struggle to recover from the COVID 19 era. This prompted U.S President Joe Biden to warn that these challenges make China a “ticking time bomb”.

    Chinese President Xi Jinping considered the economic recovery in China to be “still in critical condition” during a meeting of the Communist Party-Political Bureau a few weeks ago. Chinese President called for measures to boost the economy stating that “the country’s development situation is complex, with the increasing negative factors in the international political and economic environment.”

    Some may mistakenly think that the economic challenges China is facing, bring delight to the United States and the Western World. However, the reality is totally different; the Chinese economic slowdown has direct consequences on the global economy, as it accounts for 40% of the world’s economic growth.

    On the other hand, China condemns these reports and sees Western media as exaggerating the current issues in China for political reasons. Li Hui, an official in the National Development and Reform Commission, emphasized that "the Chinese economy has a high degree of flexibility, potential, and vitality. Moreover, its foundations that will sustain long-term growth remain unchanged," pointing to the increasing positive factors that enhance comprehensive economic improvement. As for the Chinese Foreign Minister, he responded harshly, stating, "Reality will slap them in the face”.

    In a report prepared by the Chinese news agency Xinhua, it was stated that the faltering global economy witnessed a struggle last year to regain its footing in the post-pandemic era. Amid numerous downward pressures and an unprecedented global landscape, the Chinese economy demonstrated a high degree of resilience, confidence, in addition to a blend of upward momentum and continuity.

    In the first three quarters of 2023, China achieved a year-on-year growth in Gross Domestic Product (GDP) of 5.2 percent. This pace propelled China forward compared to major world economies, thereby laying a solid foundation for achieving its annual goal and fostering stronger growth in the coming year.

    Here we can pose a question: Why can the Chinese economy move forward in the face of opposing winds represented by the escalating global instability and uncertainties?
    In addition to its economic strengths, China’s sustained economic recovery can also be attributed to its diligent pursuit of new initiatives aimed at achieving high-quality development, as well as its steadfast commitment to high-level openness.

    Last year, Chinese electric vehicle industries took significant strides. Major electric car manufacturers in China are also increasing their investments abroad, particularly in Europe. Regarding electric vehicle batteries, the cooperation between China and the European Union has seen significant and notable developments. Stellantis, the world's fourth-largest automotive group owning 16 car brands, and Contemporary Amperex Technology Co. Limited (CATL), a leading Chinese innovator in new energy technology, recently signed a memorandum of understanding covering local supply of lithium iron phosphate battery cells and packs to support electric vehicle production in Europe.

    China is working to enhance a new development model through high-quality openness, which is deemed essential to China's miraculous economic rise over the past four decades.

    In October, China hosted the third Belt and Road Forum for International Cooperation. This year marks the 10th anniversary of the Belt and Road Initiative and the 45th anniversary of China's reform and opening-up. The Belt and Road Initiative represents a high-quality openness alongside high-quality development. The meeting yielded fruitful results, with the value of China’s foreign trade agreements reaching 97.2 billion dollars. The success of the forum sends a clear message of seeking solidarity, cooperation, openness, and mutually beneficial outcomes for both parties.

    As a major trading partner of more than 140 countries, China is taking new measures to improve the domestic business environment for foreign investors.

    In August, China introduced guidelines consisting of 24 specific measures to enhance the improvement of the foreign investment environment and promote the inflow of foreign investment. This represents a significant push towards high-quality openness.

    China is ready to collaborate with other countries to make the global market cake larger, enhance global benefit-sharing mechanism, and explore new avenues for international cooperation.

    Investor and globally renowned financial commentator Jim Rogers pointed out that China's commitment to high-level openness will "benefit the world as a whole." He believes that China's expansion in high-level openness is highly beneficial for both the world and China. This perspective underscores the interconnectedness of global economies and the positive impact of China's policies on a broader scale.

    He mentioned, "All I've read about China these days is that Beijing has decided it's going to continue to open up," adding that "China is going to engage more with the outside world”.

    Undoubtedly, the West has its agenda in attempting to exert pressure on China with these reports, some of which have concluded that China's future economic role has been exaggerated. However, observers of the Chinese reality understand that if the Chinese government implements certain structural reforms in the state, which may temporarily disrupt China, they are essential for sustaining long-term economic prosperity.