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China's economic recovery
EconomyEconomic Indicators

China’s economy seeing ‘seismic shifts’ and imbalances like nothing Beijing predicted, senior economist says

  • Prominent government adviser Liu Yuanchun says immediate future will be marked by disequilibrium, and appropriate adjustments will take time
  • More non-economic risks are emerging than economic ones, he says after China reports expectation-beating GDP growth in first quarter

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China-made electric cars await export on Tuesday at a container terminal in Jiangsu province. Photo: AFP
Frank Chenin ShanghaiandKinling Loin Beijing

The sweeping challenges that China is contending with have far exceeded Beijing’s predictions as the economy continues to navigate an “imbalance/disequilibrium”, according to a leading economist who also stressed that – in light of these outsized factors – achieving 5.3 per cent growth in the first quarter was an odds-defying feat.

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“Covid’s scarring effect has been deeper and broader than expected. Structural adjustments and upgrades are occurring quicker than planned. The fiscal standing of local governments is deteriorating quicker than thought,” said Liu Yuanchun, president of the Shanghai University of Finance and Economics.

“Also, seismic shifts, unseen for 100 years across the globe, are accelerating faster than predicted, with more non-economic risks emerging than economic risks,” the senior government adviser added, speaking at a forum in Shanghai on Tuesday.

Liu said China’s development in the recent past and the immediate future will be marked by such disequilibrium, and striking a new balance will take time.

He added that challenges arising in the post-pandemic era and from rivalries with other economic superpowers have been “more daunting” than those that unfolded a decade ago when China’s double-digit economic growth became a trend of the past, prompting President Xi Jinping to flag a “new normal” of moderating growth.
One indicator of the new uneven growth and transition has been overcapacity, with the producer price index declining in March by 2.8 per cent, year on year, while languishing in the negative range for the 17th straight month.
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