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China: an engine of world economic growth
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CHINA has ample reasons to stay confident in face of speculators. Far from some speculators’ claims, China is not a source of trouble but an important engine of global economic growth with its growing demand and investment.
Here are the numbers. China registered a growth rate of 6.9 percent last year amid a sluggish global economy, contributing more than 25 percent of global economic growth.
Chinese tourists spent 1.2 trillion yuan (US$182 billion) overseas, while the country’s investors pumped 735 billion yuan into other economies.
Speculators claimed they see a hard landing for China. It is true that the growth of the world’s second-largest economy is experiencing a relative slowdown compared with the blistering growth of the past decade.
But decision-makers have now opted for a slower pace in order to make the country’s growth more sustainable in the future.
Moreover, a growth rate of 6.9 percent is the envy of most other economies. China’s added economic output last year was more than the gross domestic product of Sweden or Argentina.
George Soros, who recently claimed he saw a hard landing for China at the World Economic Forum in Davos, Switzerland, has made the same prediction several times in the past.
It’s an exaggeration to say that China increases global deflationary risks. Imagine the world without the demand and growth from China — global economic growth would have been much worse, possibly at higher risk of deflation.
The world economy is having trouble because of the sluggish growth and slow recovery of many economies.
International investor Jim Rogers said recently that the monetary policies of the US Federal Reserve and the expansion of government debt are the original sources of the problems.
Meanwhile, China’s economic transformation is currently under way.
Figures show that foreign investment in China’s service sector grew robustly in 2016, and the country attracted US$136 billion in foreign direct investment.
Thanks to government policies encouraging innovation and the streamlining of procedures, entrepreneurship is flourishing and bringing fundamental change to Chinese society. In the first half of 2015, the number of newly registered businesses exceeded 10,000 on a daily basis.
Employment creation is strong too, which, coupled with a sound growth rate and strong capital formation and innovation, means that the world’s second-largest economy is unlikely to experience a hard landing.
So why do speculators make claims that run counter to reality? Analysts said it is because either the short-sellers haven’t done their homework or that they are intentionally trying to create panic to snap profits.
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