Peak China narrative is flawed, former Australian prime minister says

17/1 2024 13:45

Former Australian Prime Minister Kevin Rudd has hit back at claims that China has peaked in arguing the current slowdown in the country's economy is just a temporary lull caused by COVID-19 and a downturn in the country's property sector.

Speaking at the World Economic Forum in Davos, the ex-Labor Party politician said he believes the peak China narrative is "intellectually and analytically flawed" as he argued "untapped potential" in the country's consumer market has the capability to drive long-term growth.

"I've never really accepted the thesis that you see written in various parts of the world about peak China, that somehow the Chinese economy is peaking, slowing and then heading towards something worse," Rudd said on a panel called "Recharging Growth in China."

The Chinese government on Wednesday released new data showing the country's gross domestic product grew by 5.2% in 2023, up from rates of just 3% in 2022 due to the impacts of Beijing's stringent COVID-19 policies on the country's economy.

The 5.2% expansion in China's economy marks a significant slowdown on the rates of growth achieved by the country in the decade prior to COVID-19, as a result of downward trends that saw GDP growth drop from rates of 10.6% in 2010 to rates of 6% in 2019.

Hong Kong's Hang Seng Index HK:HSI fell 3.7% on Wednesday as Japan's Nikkei 225 (NIY00) index fell by 0.4%. See roundup of Asia markets.

Rudd, who is now Australia's ambassador to the U.S., instead argued that the "unprecedented" size and scale of the Chinese consumer market has the potential to continue driving growth, as he brushed aside the recent slowdown as temporary.

"So long as the Chinese consumer has confidence in the future, then the economy will continue to grow reasonably well. That's a core fact, and remember the scale of the Chinese consumer market is unprecedented in global economic history," Rudd said.

The ambassador instead blamed the recent slowdown in China's economy on the impacts of COVID-19 and the downturn in the country's property market as acknowledged that Chinese consumers have had a "rough time in recent years.

"They, like the rest of us, had to endure the pandemic. Since then, you've seen the property market which represents 28% of GDP go through unprecedented tumult and if you've had your savings tied up in property investment then frankly you're in negative investment territory," Rudd said.