Situation in China set to lead world into global economic crisis

The global economy is about to take a nosedive in 2023 and the escalating situation in China is to blame, experts have warned.

Australians and other citizens around the planet scraped their way through a cash-strapped 2022 but the new year might bring with it an even more turbulent economic landscape.

And one country is mostly to blame – China.

Experts have issued a grim warning about the state of the world’s finances for 2023 as China is caught in the throes of the worst Covid-19 outbreak the globe has yet seen.

A month ago, on December 7, Chinese President Xi Jinping abruptly abandoned his controversial zero-Covid policy amid unprecedented protests across the country, causing Covid-19 to rip through the population.

The International Monetary Fund warned on New Year’s Eve that economic slowdown in Europe, the US and China didn’t bode well for the global economy.

The sluggish growth in Asia is of particular concern.

Head of the IMF, Kristalina Georgieva, told CBS: “For the first time in 40 years, China’s growth in 2022 is likely to be at or below global growth.”

This will have massive flow-on effects, experts warned.

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A delivery driver stands among a backlog of packages due to Covid outbreaks in Beijing, China. Picture: Kevin Frayer/Getty Images

Disturbing video emerged showing a hospital ward and room inundated with Covid-19 patients in China. Picture: Twitter

George Magnus, an economist and associate of Oxford University’s China Centre, said China’s Covid infections could have a global impact.

“You are going to see supply chains getting choked up, ports will become congested, they won’t export as much and people won’t turn up for work because they are sick,” he told The Telegraph London.

“The question is how quickly the virus surges through the population – and if Beijing is anything to go by, it is happening very quickly.”

In 2020, the world’s shipping industry was nearly brought to a standstill when the virus first emerged thanks to China’s then strict Covid policies.

There are already signs of China’s internal supply chain imploding, with pictures emerging of packages dumped on the street amid a massive depot backlog as sickness causes a shortage in delivery drivers.

Experts are bracing for more than 60 per cent of the population to be infected in the coming weeks.

China’s Covid-19 outbreak is thought to be the “largest the world has ever seen” and it’s estimated as many as 248 million people contracted the virus in the first 20 days of December.

That’s according to leaked minutes from a meeting held by health authorities, which also estimated that nearly 37 million people in China caught Covid-19 in a single day.

Horrifying photos and videos have since emerged of bodies lying in hallways at hospitals and morgues, fever medication and oxygen tanks running out, and desperate calls for retired medical workers to return to hospitals to alleviate some of the pressure.

Overflowing hospital morgues—Fever meds shortage, oxygen tanks EMPTY, 🏥 overwhelmed, blood shortage, death tolls soaring among elderly ==>lots of body bags—even at a top Beijing hospital too. Worsening #COVID19 yet to come. But still 0 official deaths.
🧵pic.twitter.com/Zy7TtidU8U

— Eric Feigl-Ding (@DrEricDing) December 24, 2022

The Reserve Bank of Australia’s (RBA) latest monetary policy from November – released before China relaxed its Covid rules – warned of the catastrophic consequences if the virus was to get out of control in the country with a population of 1.4 billion people.

“The Chinese economy could grow more slowly than forecast given risks associated with the authorities’ approach to controlling Covid-19 and stress in the property market,” the RBA wrote.

“Growth could be particularly weak if China’s continued attempts to suppress the virus fail to contain outbreaks quickly, causing a repeat of the economic drag observed during the April/May outbreaks.”

Even Chinese President Xi Jinping made a staggering admission during a New Year’s Eve message where he, too, warned of a tough year to come for his citizens.

“Since Covid-19 struck, we have put the people first and put life first all along,” he said.

“With extraordinary efforts, we have prevailed over unprecedented difficulties and challenges, and it has not been an easy journey for anyone. We have now entered a new phase of Covid response where tough challenges remain.”

Xi Jinping made an unprecedented admission following the move to scrap Covid restrictions. Picture: SPA/AFP

China is facing an equally as pressing problem that is also a hindrance on its economy – its crumbling property industry.

In 2021, Chinese real estate heavyweight Evergrande earned the unwelcome title of the world’s most indebted real estate firm after racking up staggering debts of around $A408 billion.

Evergrande’s share price tanked and the firm missed a string of payment deadlines, which eventually saw it officially declared in default for the first time in December 2021.

But now, more than a year since then, it’s rescue plan is not going well.

Evergrande still hasn’t revealed its offshore debt-restructuring plan which the firm was meant to do by the end of 2022.

The massive company’s failure has kept China’s real estate industry on edge and if it does collapse, it will have massive implications for banks and millions of Chinese homeowners as well as the global economy.