Sunday, 22 May, 2022

China sounds alarm on slowing economy

China sounds alarm on slowing economy

BEIJING: China’s top law-enforcement body identified global inflation and slowing domestic growth as key political risks, a rare warning about the economy from one of the ruling Communist Party’s most powerful organisations.

The Asian nation is facing a combination of pressures not seen in many years, namely “shrinking demand, supply shocks and weakening expectations,” according to a commentary by the Central Political and Legal Affairs Commission, a party organ that oversees police, prosecutors and courts, report agencies.

“With the economic downturn, some deep-seated problems may surface,” according to the article published on Sunday on the commission’s news website. “If economic and financial risks are not handled property, they can be easily transmitted to social and political realms.”

“The world is facing energy shortages and even crises, filled with predictable and unpredictable risks,” it added. Chinese President Xi Jinping echoed these sentiments in an address to the World Economic Forum via video link on Monday, calling on nations to secure global supply chains and prevent shocks from rising prices.

Xi, 68, also highlighted the risks of rate hikes by other countries - suggesting concern about the yuan and other impacts on developing countries. An energy crunch and rising inflation in Kazakhstan, which borders China on the west, led to unrest earlier this month.

Xi’s government said it supported Kazakh President Kassym-Jomart Tokayev’s efforts to end what it called “chaos.”

On Monday, China’s central bank cut its key interest rate for the first time in almost two years to help bolster an economy that’s lost momentum because of a property slump and repeated virus outbreaks.

Official data released later in the day showed gross domestic product rose 4 per cent last quarter from a year earlier, the weakest since early 2020.