China looks to boost battered economy after it drops in power rankings

It was a global powerhouse but its harsh response to the Covid-19 pandemic has seen a sharp decline in its influence as officials look to reboot its economy.

China has been booted out as the top power player in the Asia region as it attempts to fire up its battered economy. Picture: AFP

China suffered a big drop in its influence in Asia over the past year, with the fallout from Covid lockdowns being largely blamed, according to a new report.

The Lowy Institute released its latest Asia Power Index, which revealed that the US has cemented its status as the most powerful nation in the region, after China’s tough border closures and lockdown rules saw it lose influence.

The report also found that China’s economic strength in the region fell to its lowest level since 2018, with some experts warning its bounce back is looking murky.

Employees work on a vehicle assembly line at a JAC Automotive factory in Qingzhou. Picture: AFP

China is only now emerging from tough zero-Covid policies that sharply curtailed its global and regional connectivity as the world’s second biggest economy, the report found.

It saw the economy grow at its second slowest rate in almost 50 years.

“China’s regional advantage has always been its proximity and degree of connection with other countries in Asia,” Lowy Institute’s Susannah Patton told the Sydney Morning Herald.

“But on all the indicators we looked at – flight connections, the flow of tourists, the flow of international students, the flow of businesspeople, the flow of capital – China really suffered during the pandemic.”

Now, Communist Party officials are looking to reboot the country’s battered economy with a senior party official making a chilling threat to people who would consider making life tough for businesses.

“Whoever causes trouble for enterprises, the county party committee and the county government will have trouble for them,” warned Sun Qianguo, as reported in The Australian.

China’s factory activity expanded in January after four months of contraction, official data showed on January 31, as its economy rebounded following the relaxation of strict Covid-19 curbs. Picture: AFP

Meanwhile, another party official ordered that a there should be an aim for three-year projects to be completed in just two.

It has been a sudden turnaround for the Asian superpower as its government scrapped its zero-Covid policy to open up the country.

This has seen one billion people infected with Covid in just six weeks, while experts believe it has resulted in one million deaths as well.

However, the reopening has offered glimmers of hope, with the International Monetary Fund upgrading its forecast for China’s growth this year to 5.2 per cent, up from 4.4 per cent.

Workers package frozen durian at a food factory in Hangzhou, in China’s eastern Zhejiang province. Picture: AFP

It’s good news for Australia too, as Treasurer Jim Chalmers had warned in January that China’s Covid wave was “one of the key risks” to the Australian economy.

Even China’s battered real estate sector is firing up, meaning iron ore demand – a huge money-making commodity for Australia – is back on the rise.

In 2023, the list from the Lowy Institute named the top 10 countries for overall power as the US, China, Japan, India, Russia, Australia, South Korea, Singapore, Indonesia and Thailand.