China’s Economy Will Serve as an Anchor of Stability in 2022

2022 is shaping up to be a year of drastic economic upheaval. The boom of COVID recovery is coming to an end. Western nations who have spent trillions of dollars on stimulus packages in order to bounce back are now experiencing daunting levels of inflation as growth rates recede, forcing prospective interest rates rises on the horizon. This is coupled with the background of the crisis between Russia and Ukraine, which has created global market turmoil, pessimism, and sent energy prices soaring. In a nutshell, if 2021 was a year of recovery and optimism, 2022 looks to be another bleak outlook.

It is no surprise that even with the mildest of these conditions, China’s economic situation would face downward pressure. From having attained 8% growth in 2021 from a lower base, the forecast for this year has been a much more reserved 5-5.5% by global economists, attributing disruptions to issues posed by real estate and falling global demand. Yet in retrospect, compared with the situation among Western economies, this is a very strong position, and China has demonstrated that it still has a range of tools in its monetary policy in order to keep growth afloat. While the West is looking at rising interest rates and moving to conservative fiscal policies, China, on the other hand, is looking at lowering rates and loosening fiscal policies. This is a sign of strength, not weakness.

As a result, China’s economic prospects could be further boosted as it will serve as an effective safe haven for global growth, underlying its importance to the global economy. This is likely to instigate an increase in inbound investment. This mindset is created by the fact that China’s underlying political and economic policies are geared towards maintaining domestic stability with the view to upholding growth. This is a key advantage of China’s system in contrast to the more chaotic approach of the West, which harbors a climate of unpredictability and inconsistency. As one defining case study, Beijing’s longstanding consistency in being able to tackle and contain the pandemic has upheld local stability, whereas constant u-turning, indecisive policies, and widespread transmission in the West have provoked economic uncertainty and diminished people’s confidence.

The virus, of course, is not going to be such a big factor in 2022, especially as other ongoing economic disruptions, including inflation, sinking of stock markets, and the Russia-Ukraine crisis, continue to show China to be a stable bet and, therefore, a destination for capital. China’s cautious approach on the world stage in terms of its foreign policy, which also promotes stability, multilateralism, and economic integration between countries, is also a green light for investment because it affirms a positive and long-term vision. This is why investment into China has also not been deterred by the West’s attitude towards it, not least as its vast market potential continues to stand above any country in the world.

In 2022, China, after all, is working on a number of free trade agreements with several countries, as announced at the Winter Olympics, including the Gulf Cooperation Council, Papua New Guinea, as well as Ecuador. This shows a different path from Cold War politics, division and confrontation, and as a result, investors around the world have responded positively. Thus, for a number of reasons, China is demonstrating itself to be an important bastion of economic stability, especially at a time whereby global uncertainties are raging high.