EDITORIAL: China has decided not to set a GDP growth target this year for the first time it started keeping growth records in 1990, which means a very deep-rooted economic downturn is anticipated in the former ‘Middle Kingdom'. This is no doubt unsettling news but it begins to make sense once one puts more and more pieces of the puzzle into place. Because of the global recession already triggered by the coronavirus pandemic, it's a new fact of life that the growth rate of any economy in the world is going to really struggle to stay above zero percent this year. And China, which has been growing at breakneck pace for at least the last two decades, still seems to be in the process of quantifying the hit its economy has taken from a number of crises over the last couple of years. Its recent troubles started in early 2018 with the onset of the trade war with the US, of course, and since then it is confronted with a new set of problems just when it seems to find its feet. Even US President Donald Trump's own team advised him against pushing China into a corner, because of the knock-on effect it would have on global production and exports, but the White House's present occupant is not known for lending too many of his advisors much of a sympathetic ear.
Yet it's one thing to sanction a country because the incumbent US president's personal feelings tend to overshadow more relevant concerns, and the system allows it, but it's quite another when the country in question is also the mythical ‘production house' of the world. And that became apparent like never before when the sanctions were implemented. Many multinational companies, especially in the US and Europe, which relied on China for a very wide range of input parts suddenly found their businesses in Washington's crosshairs. That didn't leave them with many choices, unfortunately, and a lot of them quickly looked for alternatives to keep from going belly up in a hurry. That's why some regional producers like Vietnam enjoyed a sudden boost in their export earnings. And by the time there were signs of a thaw in the relationship, and some sanctions were lifted, many Chinese companies that produced those input parts had already been given the kiss of death. And then came the Covid-19. Since it started in China itself, and the whole world was forced to suddenly avoid the Chinese market, no pun intended, quite like the plague, the world's second-biggest economy was pretty much in trouble by the time the rest of the world was thinking of locking down as well. And now, even as the virus continues to take a toll of peoples' health and lives around the world, Beijing must prepare for what the international press is calling ‘a new Cold War' with the US.
The very system of global linkages that enabled China to leverage its large workforce and produce and deliver almost everything the mammoth global economy required is now struggling to stay afloat. And the reason is a microscopic virus that spreads with the speed of light and simply does not allow even a few people in the same place at the same time. That has closed homes, workplaces, communities, trade and borders. Now many million Chinese workers are sitting at home and wondering what to do next; hence the decision of the Communist Party of not setting a growth target this year. All this is very bad news for Pakistan. Not only is China one of its most reliable friends and partners; the China Pakistan Economic Corridor (CPEC) has now become something of a long-term economic lifeline for Pakistan. Our own economy is also woefully contracting this year, with remittances, tax revenues or export earnings unlikely to inspire much confidence in the short-term. Therefore, at a time when both countries have precious little resources to spare for long-term projects, China's internal problems could quickly add to ours and slow down CPEC for a while; even put it on hold in the worst case scenario. These are ominous developments indeed, especially from Islamabad's point of view.