Chinese President Xi Jinping pledged to meet economic targets for the year even as the government’s zero tolerance approach to combating Covid outbreaks and a weak housing market put the growth goal further out of reach.
In a keynote speech to a virtual BRICS Business Forum on Wednesday, Xi said China will “strengthen macro-policy adjustment and adopt more effective measures to strive to meet the social and economic development targets for 2022 and minimize the impacts of Covid-19,” according to a Xinhua report.
Of course, he can promise to report reaching the growth target. He is the God King. Whether the underlying economy actually reaches it is another question entirely.
My answer is there is very little chance of that given:
the property starts bust will get worse for another six months yet even if sales lift now;
lockdowns will continue unless or until something changes;
a monumental trade shock is headed for China as the US and Europe both go into recession.
I put the probability of China suffering from a capital outflow external crisis before year-end as high as I do it reaching its growth target. Both are tail risks.
But, hey, preventing those kinds of outcomes is why Xi is lying in the first place.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
