PHOTO: VCG

By QI Liming

China's economy will grow 5.3 percent this year, up from the 4.8 percent forecast in January. That's according to a United Nations projection released in a mid-year update of its World Economic Situation and Prospects 2023 report on May 16.

China's economy is steadily recovering after the pandemic and remains strong, instilling confidence in its economic future, according to Hamid Rashid, lead author of the mid-year report.

However, as recovery of the world's economy continues to be a struggle, politicians in some countries smear and suppress China for political purposes, even at the cost of their own country's economic recovery, which is unwise.

No one can benefit from decoupling

As Canadian media CBC News reported, economists worry growing conflict with China will make Canada and the world poorer. Analysts said that the "Cold War" effect could slow down economic recovery and weaken dialogue on crucial issues.

"Even as we need more international co-operation on multiple fronts, we are facing the spectre of a new Cold War that could see the world fragment into rival economic blocs," warned IMF Managing Director Kristalina Georgieva earlier this year. "This would be a collective policy mistake that would leave everyone poorer and less secure."

Bank of Canada governor Tiff Macklem raised the issue in testimony to Canadian Senate Standing Committee on Banking, Commerce and the Economy in April after discussions in Washington.

"The reality is we have all benefited tremendously from an increasingly integrated global trade and investment system and if that goes in reverse, that will certainly have a cost to global growth," Macklem told senators.

Looking at Canada specifically, Danielle Goldfarb, vice-president of global affairs, economics and public policy at the Toronto-based research company RIWI, said as an open trading economy, a decline in global trade could hit the country hard.

Growing domestic markets as a priority

Not all the traditional American allies are considering following Washington's lead in pursuing economic "decoupling" from China however, since these countries would prefer to see their own markets growing.

The Strategist, the commentary and analysis site of Australian Strategic Policy Institute (ASPI), reported that in Western Europe, France and Germany are showing an unwillingness to join their allies (U.S.) in decoupling from China. French President Emmanuel Macron's recent comments that Europe should not get "caught up in crises that are not ours" demonstrate this.

China is one of France and Germany's major trading partners outside of Europe and a significant export market for luxury goods and pharmaceuticals.

Genevieve Donnellon-May, the Asia-Pacific analyst at The Red Line podcast and researcher at the Oxford Global Society, said that given all the evidence, making a show of decoupling from China could cause significant repercussions for France and Germany. The costs of decoupling outweigh the benefits for the two governments.

American companies dependent on China's economy

According to CNBC, U.S. companies like Procter & Gamble, Starbucks and MGM Resorts International all said that China's recovery is boosting their overall sales, as consumers in their home markets tighten their belts. With its large population and swelling middle class, China is a desirable market for many multinational companies that have seen their U.S. businesses mature.

Meanwhile Piper Sandler analyst, Korinne Wolfmeyer, called Coty one of her favorite beauty stocks in a note to clients recently, following Coty's quarterly earnings report. She in part cited its China performance.

"We are remaining cautiously optimistic on China for the beauty market in the near term, but for COTY specifically, we view the company's strategic investments in the region and key product launches as a driver of market out-performance," she wrote.