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Don’t ignore positive signs in China’s economy
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Recent financial volatility has cast a shadow on the Chinese economy, but people need to view the bright side if they want to have the full picture.
Chinese officials never deny that the world’s second largest economy is facing trouble. It is not easy to deliver an annual growth of around seven percent after three decades of rapid expansion.
It is true that China’s traditional competitiveness is fading amid rising labor costs and tougher measures to protect the environment, but some Western analysts have overstated the case.
They expect a “hard landing” or even a collapse of the Chinese economy, as the stock market rout and weaker yuan fuel such pessimism. However, the G20 finance ministers and central bank governors, representing 85 percent of the global economy, reached a consensus last week that there was no reason to fear slower Chinese growth.
These senior policymakers see a different picture from the pessimists because they paid enough attention to glimmering signs of improvement in the Chinese economy. China’s real estate sector continues to warm this year. Property is of greater significance than stocks to economic growth and financial stability since real estate is one of China’s pillar industries.
In August, power generation rose to its highest level this year. Rail freight edged up. Steel production and prices began to grow following four months of decline.
China maintains momentum in commodity imports, refuting accusations that shrinking Chinese demand caused weaker commodity prices. In July, at least 21 different commodities reported China sales growth of more than 20 percent. While China’s manufacturing PMI in August fell below 50, the expansion-contraction line, sub-indices for high-end manufacturing and consumer goods production came in at 52.2 and 54.6, indicating strong vitality.
Chinese cinemas are crowded with moviegoers, restaurants are filled with customers and tourist attractions are full of Chinese sight-seers.
All these signs show the country is transforming from an investment-led economy to one based on high-end manufacturing, consumption and services.
China is the world’s most populous country and the second largest economy. It is impossible for the Oriental giant to sustain double-digit growth.
But its market potential is still huge and the country is far from high-level industrialization and urbanization.
Don’t be fooled or frightened by overblown stories or biased analysis that say China is slipping into crisis. Instead, with positive signs emerging, the economy is becoming healthier and more sustainable.
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