China warns of 'heavy rains' as Red Sea clashes cloud growth prospects

Asia House outlook for 2024 is positive for regional powerhouses but trade could be knocked off course

Zheng Zeguang, Chinese ambassador to Britain, was speaking at Asia House on Tuesday at the launch of the 2024 Annual Outlook. Alamy
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China's ambassador to the UK has signalled Beijing's concern over the role of the Red Sea shipping crisis and other international flashpoints over the Chinese and global economic outlook in 2024.

Speaking at Asia House, the London-based think tank, Zheng Zeguang noted China was at the forefront of global growth prospects – its contribution is more than 30 per cent of the total – but the momentum seen in 2023 was vulnerable to shocks this year.

"Looking ahead, there will be heavy rains in the year 2024," Mr Zheng said. "External demand will continue to be weak and the uncertainties we are confronted with in so many places around the world means we need to redouble our efforts in stabilising the market and restoring confidence."

He also noted the role of elections around the world – more than two billion people are expected to go to the polls in 2024 – including in the UK, where he said he hoped the government would work with China to increase “mutual trust” and the winner of the election would have a "good grasp" of a changing Asia-Pacific.

Anne-Marie Trevelyan, UK Minister of State for Indo-Pacific affairs, responded to the Chinese address by noting her new boss, Foreign Secretary David Cameron, had underlined the importance of the seas in international stability.

China's export-driven economy dominates east-to-west cargo ships, which in turn account for more than 12 per cent of world trade transiting the Red Sea. Overnight strikes by the US and UK, the eighth authorised by Washington on Houthi forces attacking international shipping and the second with British participation, had raised the stakes for the growth outlook projected by the think tank.

"The Foreign Secretary has called this an 'age of insecurity' and that insecurity can fan out both by land and by sea," Ms Trevelyan said. "And of course the recent situations in the Red Sea are a blunt reminder of what that looks like.

"Something that became particularly stark in 2023 is that Euro-Atlantic and Indo-Pacific security are clearly inseparable. Understanding that, and for that reason, that's why the UK and so many of our partners want to be part of sustaining a free and open Indo-Pacific.

"Simply put, it is in our interests for the Indo-Pacific to be secure and stable."

Economists forecast China will undergo 4.6 per cent growth in 2024, according to the Asia House report, which also says the continent as whole will grow by more than 5 per cent.

It warns, however, that rising fuel, fertiliser and food prices could yet derail these forecasts.

"Economies that rely heavily on food and energy imports are very likely to see a strong inflationary effect if global food and energy prices rise quickly," the report said. "There is a risk that the Houthis could continue to escalate tensions in the Red Sea, increasing volatility within global energy markets."

Updated: January 23, 2024, 4:53 PM