China’s role in the global economy

Battered by the last four years of pandemic, record inflation, long-drawn-out wars and high interest rates, the global economic outlook continues to be lacklustre. In its latest World Economic Outlook update, the International Monetary Fund (IMF) forecasts that the global economy will grow 3.2 per cent this year, down a tick from 3.3pc growth last year. From 2000 through 2019, before the pandemic upended economic activity, global growth had averaged 3.8pc a year. Even this modest global expansion, the IMF notes, is being powered by stronger growth in China. The Fund expects the Chinese economy to grow by 5pc this year, an upgrade from the 4.6pc it had predicted in January but slower than the 5.2pc expansion the previous year. China alone accounts for nearly a third of global growth. According to IMF analysis, a one percentage point increase in China’s GDP growth would result in an average of 0.3 percentage point increase in growth for other economies. In China, the IMF said, the resurgent domestic consumption propelled the positive upside aided by what looked to be a surge in exports belatedly reconnecting with last year’s rise in global demand.