Washington/Beijing: – Since the last few months, China is claiming that its economy is coming back on track. A new report says that the real picture is different. The thinktank China Beige Book claimed that the Chinese economy could not return to normal before the end of first quarter of 2021. The report says that this claim is being made based on the information collected from 3,000 Chinese entrepreneurs. Coronavirus pandemic, Lockdown and suspended air travel have repeatedly rocked the global economy, since the beginning of this year. Most of the world’s important economies are still declining and it is being predicted that negative growth rates will be reported by the end of the year. It is also being claimed that these economies will require at least one to two years, to restore to the pre-Corona growth rates. Against this background, since the last few months, China has started claiming that the Chinese economy is gaining momentum.
But there have been developments proving these claims to be false, in the last few weeks, and the China Beige Book report also seems to be a part of this. China Beige Book claimed to have interacted with 3,000 Chinese entrepreneurs. They were asked questions regarding the sale, profit and new employee recruitments. Nearly two-thirds of these entrepreneurs have recorded a verdict that it will take a few months to sell, profits and recruitments to return to normal.
Moreover, China Beige Book has claimed that Chinese products’ sale has declined substantially in the last quarter of the year. Chinese banks and financial institutions have reduced their lending to the retail sector and 38% loans were rejected in the last quarter of the year. Although the picture is that the Chinese exports are increasing, the China Beige Book report also mentions that the imports are declining.
Last month, it had been reported that many Chinese government and private companies had refused to honour their commitments regarding the Debt bonds. It was said that this number has crossed $6 billion. Sensation had been created in the investors as the list also contains government companies. The estimated worth of the Chinese debt market is nearly $20 trillion and 75% of these are government bonds.
In the past, the Chinese government would take the responsibility of such companies. But now, with the Change in the policy, these companies could declare bankruptcy. The Chinese economy’s total debt burden is also increasing and it is said that it has reached 335%. The World Bank and International Monetary Fund have already issued warnings that this burden is increasing rapidly and even the global economy could receive a hit due to this.