China emerging as the engine of global growth amid the Covid pandemic
The irony is striking. While Donald Trump and Joe Biden have been busy bashing Beijing in the run-up to the presidential election, the Chinese economy has seen a vigorous bounce back. In the midst of the coronavirus pandemic, China is emerging as the engine of global growth.
China is the only big economy expected to show a positive advance this year, with the IMF projecting growth of 1.9 per cent, followed by 8.2 per cent in 2021. Yet continuing trade friction between the world’s two largest economies means that the US will not benefit from this expansion as it did from China’s huge fiscal and monetary pump priming after the great financial crisis of 2007-08.
Chad Bown of the Washington-based Peterson Institute for International Economics points out that China’s imports from the US of goods covered by January’s trade deal have failed to catch up to pre-trade war levels, running 16 per cent lower than at the same point in 2017. In contrast, Chinese imports of similar goods from the rest of the world are 20 per cent higher over the same period.
At the same time, Mr Bown says, China’s commitment to buy an additional $200bn of American-made goods and services under president Trump’s self-proclaimed “historic” deal is falling well short, reaching only 53 per cent of the expected purchase target at the end of September.