China's Xi Jinping sounds alarm over inflation threat to global recovery

Tom Rees

Mon, January 17, 2022, 3:04 AM

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Xi Jinping Davos inflation

Surging inflation is threatening the global recovery and putting China’s economy under “tremendous pressure”, President Xi Jinping has warned.

The leader of the world’s second-biggest economy told the Davos summit that the world is “emerging from the depth, yet it still faces many constraints” after the low inflation backdrop “notably changed”.

He called for coordination on global economic policy in his address to the summit, which is being held online for the second year.

“If major economies slam on the brakes or take a U-turn in the monetary policies, there would be serious negative spillovers,” Mr Xi said.

“They would present challenges to global economic and financial stability, and developing countries would bear the brunt of it.”

He insisted that the Chinese economy will be resilient against growing headwinds but warned that “shifts in the domestic and international economic environment have brought tremendous pressure”.

“The fundamentals of the Chinese economy are unchanged; it remains resilient, has sufficient potential and its long-term prospects are positive,” Mr Xi added.

His comments come as China unveiled more economic support to fight the omicron blow after its zero-Covid strategy and property market woes slowed growth to its weakest pace in 18 months.

GDP rose by 4pc year-on-year in the final three months of 2021, down from 4.9pc in the previous three months. Forecasters warned that Beijing’s use of draconian lockdowns would mean a tougher year ahead for the world’s second-largest economy.

China’s central bank cut a key lending rate for the first time since April 2020 after Beijing placed 20m people into ultra-strict lockdowns ahead of next month’s Winter Olympics.

New outbreaks in Beijing and Shanghai in recent days have sparked fears of lockdowns spreading to China’s biggest cities.

Economists fear China’s economy will be hit hard by omicron this year as the faster-spreading variant pushes its zero Covid stance to the limit.

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North Korea launches 4th missile test in 2 weeks

Mon, January 17, 2022, 3:13 AM

North Korea fired two short-range ballistic missiles toward the East Sea Monday morning, its fourth test in less than a month.

“South Korea’s military detected two projectiles believed to be short-range ballistic missiles launched into the East Sea to the northeast from the Sunan Airfield in Pyongyang, North Korea, around 08:50 a.m. and 08:54 a.m.,” South Korea’s joint chiefs of staff told reporters Monday.

The missiles traveled about 236 miles and reached an altitude of about 26 miles, said South Korea’s military, which was analyzing details of the launch.

It was the fourth missile launch this year, following two self-claimed hypersonic missile tests on Jan. 5 and Jan. 11 and last Friday’s short-range ballistic missile that the secluded regime’s state news agency, KCNA, claimed was launched from a rail car.

Pyongyang’s consecutive showcases of its military capabilities came as the United States discussed sanctions on North Korea’s nuclear program.

“North Korea probably believes they pulled out a response from the U.S. by firing hypersonic missiles in the new year because the U.S. acted with new sanctions,” Moon Keun-sik, a military expert at the Korea Defense and Security Forum, told ABC News. “North Korea claims that ballistic missile test-launch is a part of the training, but it also acknowledges that their action is a UN violation.”

North Korea has said its weapons development is a rightful act of self-defense. The country blames the U.S. for escalated tensions.

“The DPRK's recent development of new-type weapon was just part of its efforts for modernizing its national defense capability. Nevertheless, the U.S. is intentionally escalating the situation even with the activation of independent sanctions, not content with referring the DPRK's just activity to the UN Security Council,” KCNA said on Friday, citing North Korea’s Foreign Ministry spokesperson.

North Korea expressed open discontent about the sanctions imposed last Wednesday on North Korean individuals and entities who support the country's ballistic-missile program.