CHINESE ECONOMY AND THE WORLD 

Global growth projections 2019, 2020, 2021. (Reuters/IMF)

Reports on China’s economy: It will be 10% bigger while all major economies will be smaller

A Journal of People report

China’s economy is making amazing gains. Reports by the mainstream media gave significant facts.

A Reuters report – “China’s economy in 2021 will be 10% bigger than it was in 2019 and every other major economy will be smaller: economist” – said on October 22, 2020:

“‘China’s economy in 2021 is going to be 10% bigger than it was in 2019, and every other major economy is going to be smaller,’ said Nicholas Lardy, an economist with the Peterson Institute for International Economics.

“That means China’s ‘role in the global economy is going to continue to expand,’ Lardy predicts, making any attempts by U.S. policymakers to discourage other countries from deals with Beijing, or otherwise ‘decouple’ China from the global economy, more difficult.”

The Reuters report said:

 “The United States and China dealt with the spread of the devastating coronavirus pandemic in vastly different ways, and that split is reshaping the global battle between the world’s two leading economies.

“About 11 months after the Wuhan outbreak, China’s official GDP numbers this week show not only that the economy is growing, up 4.9% for the third quarter from a year earlier, but also that the Chinese are confident enough the virus has been vanquished to go shopping, dine and spend with gusto.”

The Washington datelined report told about China’s total reported death toll in the COVID-19 pandemic: Below 5,000. 

It said new COVID-19 infections in China are negligible.

The report referred to strict lockdowns, millions of tests, and strict contact tracing, and said these measures set the stage for an economic rebound.

The report by Andrea Shalal and Gabriel Crossley said:

“‘China’s success in containing the virus has allowed its economy to rebound more quickly, and with relatively less policy support, as compared with other large economies,’ said former senior U.S. Treasury official Stephanie Segal, a senior fellow at the U.S.-based Center for Strategic and International Studies.”

The Reuters report referred to the COVID-19 pandemic in the U.S. as it said:

“In the United States, 221,000 people are dead from COVID-19 after a delayed federal response, partisan battles over mask-wearing and lockdowns, and plenty of public events that do not follow public health guidelines. The country is in the midst of a new wave of infections.

“Entertainment venues, restaurants and tourist spots are closed or only partially open, millions of people are out of work indefinitely, GDP is expected to shrink this quarter and the United States faces a gap in economic output that could last years.

“‘Obviously the U.S. government bungled it,’ said Harry Broadman, a former senior U.S. trade official and managing director with Berkeley Research Group. The singular authority of China’s Communist Party helped Beijing enforce contact tracing and lockdowns, Broadman said. Other democracies, including New Zealand and South Korea, stamped out the virus as China did.

“The real difference between the United States and China is Washington ‘has been arguing over stimulus issues on Capitol Hill and it’s still far too little and too late,’ said Broadman, who has served under both Republican and Democratic presidents. ‘That has created more and more uncertainty on the part of business.’

“Ahead of a Nov. 3 re-election bid, U.S. President Donald Trump has blamed China for the spread of the virus and asserted his administration had done all it could to contain it. Asked during a town hall due to be broadcast on Sinclair Broadcast Group on Wednesday if he would have done anything differently, Trump said, ‘No, not much.’”

The report said:

“Tyler Goodspeed, acting chairman of the White House Council of Economic Advisers, told Fox Business on Wednesday the pace of the U.S. recovery to date had vastly exceeded expectations. But opinion polls show Americans are increasingly unhappy with Trump’s handling of the pandemic.”

It said:

“Experts cite longer-term concerns about China’s economic prospects, including the high debt levels of its state-owned companies.

“‘Reliance on investment-led growth, fueled by credit expansion, builds up even further leverage and risks in an already weak financial system, and will further pull down efficiency and the sustainable growth rate,’ said Mark Sobel, a former senior U.S. Treasury official.

“But for now, the divergent responses to the virus will have an impact on the fierce political and economic rivalry between Beijing and Washington with ripples felt around the world, experts said.”

It added:

“China’s exports have been stronger than expected, bolstered by demand for medical goods overseas. While the IMF projects global trade volume will fall by 10.4% in 2020, China’s overall share of global trade has grown.

“Beijing is experiencing other benefits as well. ‘We see signs of China’s success in the exchange rate and equity market performance at a time when many other economies are under pressure,’ Segal said.

“China’s fiscal deficit for 2020 will expand by 5.6 percentage points to 11.9% of GDP – a smaller-scale increase than the massive stimulus that Beijing deployed during the 2008-2009 financial crisis, the IMF’s Fiscal Monitor shows.”

The report referred to the U.S. economy:

“By contrast, the United States will see a 12-percentage point increase in its 2020 fiscal deficit as a share of GDP, to nearly 19%.”

It said about China’s consumption, which “is improving, retail sales are still down 7.2% over the first three quarters, with urban residents’ disposable incomes down 0.3% over the same period. Strict lockdowns earlier in the year led to months of lost wages for many workers.”

It said:

“In Beijing, officials are highlighting their leadership role.

“‘China’s epidemic control and prevention is at the forefront of the world, and China’s companies are supporting the global resumption of work and production through their own resumptions,’ said Liu Aihua, spokeswoman for the National Bureau of Statistics, at a news conference where she announced the third quarter GDP results.”

The report referred to the U.S.:

“The United States still lacks a robust contact tracing system, or enough testing, Lardy said. These are things the U.S. could have ‘done much better at without being an authoritarian single party state,’ he added.

Grows at 4.9 Percent

A National Review report (Oct 19, 2020) – “Chinese Economy Grows at 4.9 Percent amid Pandemic, Driven by Renewed Exports” – said:

“Chinese officials reported on Sunday that the country’s GDP grew by 4.9 percent in the third quarter, despite the ongoing toll the coronavirus pandemic is taking on the global economy.

“The newly recorded growth is close to projections of 5.5-6 percent growth predicted by economists before the pandemic, the Wall Street Journal reported. The International Monetary Fund predicted last week that China’s economy will grow by 1.9 percent this year, the only major economy to experience growth in 2020. Meanwhile, the American economy will shrink by 4.3 percent while Europe’s economy will contract by 8.3 percent, the IMF has said.”

The report by Zachary Evans said:

“The novel coronavirus first appeared in Wuhan, China, leading that nation’s government to impose sweeping lockdowns throughout the country beginning in early February. China was able to reopen many of its factories beginning in April, and other nations’ demand for medical equipment and various other goods has allowed China to rely on exports to propel its economy forward.

“The growth has come after a raft of stringent measures, including weeks- or months-long lockdowns and invasive cell phone tracking programs, that are unappealing to other countries. The government has forced residents of Xinjiang Province to take unproven concoctions of Chinese medicine to treat coronavirus, as well as locking residents inside their homes for weeks.”

It said:

“China’s rebound also comes with caveats, as the economy has accumulated a large amount of debt over the past half year.

“The news comes as both the U.S. and Europe are seeing an uptick in coronavirus cases. European nations and U.S. states have implemented different policies to attempt to mitigate spread and ensuing economic damage, although both areas have little appetite for additional lockdown measures.”

Ahead of the rest

A report by The Telegraph – “China’s economy accelerates ahead of the rest in race to recovery” – said:

“China’s economy is almost 5pc bigger now than it was a year ago as retail sales and investment returned to growth, and industrial output and exports powered the recovery.

“The world’s second-largest economy has become the first major nation to escape the clutches of the pandemic, despite serving as the cradle of the coronavirus.

“Official figures from the National Bureau of Statistics of China indicate GDP in the third quarter was 4.9pc higher than it was a year earlier.

“It represents an acceleration from growth of 3.2pc in the second quarter.”

The report by Tim Wallace said:

“China imposed strict lockdowns on entire cities at a time in the first quarter of the year, causing GDP to fall by 6.8pc on the year.

“But it has rebounded rapidly, with quarter-on-quarter growth of 11.7pc in the second quarter and another 2.7pc in the third quarter.

“September’s industrial output was up 6.9pc year on year, with retail sales up 3.3pc and exports up 10pc.

“‘Although Chinese data have to be treated with caution, more reliable data such as those on Western exports to China paint a positive picture: despite some serious long-term problems, China seems to be the only major economy whose GDP apparently exceeds its pre-pandemic level already,’ said economist Holger Schmieding at Berenberg Bank.”

The October 19, 2020 datelined report said:

“The latest forecasts from the International Monetary Fund indicate China will be the only major economy to grow in 2020.

“Its analysts expect GDP to grow by 1.9pc this year, compared to a fall of 4.4pc across the world as a whole, including drops of 4.3pc for the US, 8.3pc for the eurozone and 9.8pc in the UK.

“Strong industrial output ‘shows that China is working hard on technology,’ said economist Iris Pang at ING.

“‘Most of the [industrial] growth was in technology-related industries. Industrial robots grew 51.4pc year-on-year.’”

It said:

“A 2021 estimate from the IMF puts China’s growth at 8.2pc, far outstripping Spain, which is on track for 2020’s sharpest contraction.

“But Miguel Chanco at Pantheon Macroeconomics said the official Chinese statistics probably overstated the growth rate. He estimated the “true” rate of growth as more like 3pc on the year.

“‘A full-year GDP contraction in China – in reality – still is on the cards,’ he said, warning that disappointing domestic tourism numbers combined with plateauing car production and sliding investment in factories could all hit the recovery.

“‘Manufacturing investment is likely to come under renewed pressure from the second waves of Covid-19 erupting across most major developed markets. The fiscal support for infrastructure capex, at the same time, is unlikely to be as strong as it was in the initial stages of the China’s post-lockdown rebound, as some of the funds raised from special purpose local government bonds are now being diverted into other non-infrastructure areas.’”

China’s central bank

Another Reuters report – “China’s central bank head says economy to expand about 2% this year” – said:

“China will see its economy expand by about 2% this year as it has got the coronavirus pandemic under control, central bank governor Yi Gang said on Sunday, signalling confidence about the prospects of a domestic demand-driven recovery.

“His remark comes ahead of Monday’s closely watched gross domestic product (GDP) data, which is likely to show the world’s second-largest economy grew 5.2% in July-September from a year earlier.

“‘I think the accumulative growth for the first three quarters of this year will be positive … For the whole year, we predict China GDP growth of around 2%,’ Yi said.

“‘The Chinese economy remains resilient with great potential. Continued recovery is anticipated, which will benefit the global recovery,’ he said in an online International Banking Seminar of the Group of 30, an independent body of economic and financial leaders from the public and private sectors and academia.

“Yi said China’s currency rate was appreciating against the U.S. dollar “significantly” in the past three months reflecting interest-rate differentials between the two countries – a development he said should be left to market forces.

“‘Monetary policy should focus on domestic demand, domestic inflation targeting … and let the market decide the exchange rate,’ he said.

“China’s fiscal and monetary policies will focus on helping small and medium-size firms weather the pain from the health crisis, while ensuring that domestic demand plays a bigger role in boosting growth, he added.”

The Tokyo, October 18, 2020 datelined report by Leika Kihara said:

“China’s economic outlook has turned more optimistic on aggressive government stimulus, with recent data pointing to a steady improvement from the COVID-19 health crisis.

“While the central bank stepped up policy support earlier this year after widespread travel restrictions choked economic activity, it has more recently held off on further easing.”