British economic growth ‘set to overtake China’

British economic growth ‘set to overtake China’

The British economy could grow faster than that of China next year, according to BNP Paribas.

UK national output is forecast to grow by 5.4 per cent in 2022, analysts at the French bank believe. China, the world’s most populous nation, is expected to expand by 5.3 per cent.

The predictions, which were first reported by The Telegraph, would mark the first time since the era of Mao Zedong that Britain would grow more rapidly than China. BNP Paribas made its forecast before the emergence of the new strain of Covid-19, first detected in Botswana.

China rebounded strongly from the first wave of the pandemic early last year, but its zero-Covid strategy could temper growth as it is forcing manufacturing and transport companies to close periodically amid new outbreaks.

A slump in the property market, which has been thrown into the sharp relief by the woes of Evergrande, the giant developer, is expected to put a further brake on growth. In addition, power shortages have emerged as a further constraint of the Chinese economy.

However, Britain could expect a “relatively robust recovery” next year as there was “still scope for catch-up”, despite shortages and rising energy prices, the French bank said. It predicted that the long-term scars left by Covid would be only half the two-percentage point wound that has been forecast by the Office for Budget Responsibility.

China’s manufacturing sector has shrunk for two months after energy shortages and turmoil in the property industry hit the world’s second largest economy, according to a recent survey of purchasing managers. The data raised concerns that the slowdown in China’s economy is gathering pace as construction slows and elevated commodity prices hit factories.

China’s sprawling manufacturing sector has eased back steadily this year, with output in September growing at its most feeble pace since March last year because of new environmental rules, power rationing and higher raw material costs.

New orders are contracting while factory gate price inflation is running at levels not reported since 2016.

The deteriorating economic backdrop will leave Beijing’s policymakers on a tightrope as they consider measures to stimulate the economy without stoking inflation. The Chinese economy has been hit by a plethora of problems, from computer chip shortages and logistics bottlenecks to electricity supply disruptions and Covid-19 lockdowns.

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