Chinese Economics Thread

now this
Opinion 19:15, 15-Jul-2019
What does China's recent economic data reflect?
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. What should be focused on in this diagnostic report of the world's second largest economy?

As the trade dispute is ongoing between China and the U.S., international trade figures attract a lot of attention from investors. In the first half of 2019, China's trade surplus reached 1.23 trillion yuan, 41.6 percent higher than in the first half of 2018. The total import and export value reached 14.7 billion yuan, growing at 3.9 percent year over year.

Compared with the anxious daily financial news, these indicators are very healthy.

However, not every item in China's international trade received significant growth. Import of soybeans has reduced by 37 percent year on year, while the import of large aircraft was reduced by around 50 percent compared with the same period in 2018. Both the trade war and the Boeing incident resulted in these slumps.

The financial sector, on the other hand, is booming. China's main benchmark stock index, the Shanghai Composite Index, rose by 17.8 percent from the end of 2018 to July 15, 2019. The M2 (monetary base tier 2) grew to 192 trillion yuan at the end of June, 8.5 percent higher than a year ago; this growth rate is also 0.5 percent higher than the rate in June 2018.

This healthy financial data shows us the possibility that the Chinese economy, especially its financial industry, is moving toward the best possible outcome. For a long time, investors have been worrying about the health of the Chinese property market.

Property prices are too expensive in metropolises, compared with the average income and real estate rentals in these cities. The defusing of this financial bomb requires sophisticated techniques. The financial market can neither be cooled nor deleveraged too quickly or slowly.

A quick defusing might trigger the detonator and a slow deleverage might further enlarge the real estate bubble. A modest monetary expansion is the key to the property market.

The property market statistics give support to this smooth industrial development. According to the latest data, the price of real estate in major Chinese cities grew by less than one percent in 2019 compared with that of a year ago. Moreover, the turnover rate is also reduced. Both signs show a cooled but stable property market.

China's consumption is still growing at a quick speed. Social consumption grew by 8.4 percent in the first half of 2019. However, retail sales in almost all kinds of traditional businesses, such as supermarkets, retail shops and franchise shops grew at rates much lower than 8.4 percent.

Their loss of growth momentum is absorbed by the internet shopping, which grew by 17.8 percent in the first half of 2019.

Moreover, according to China's National Bureau of Statistics, consumption contributed to 60.1 percent of the GDP growth in the first six months of 2019. This is a clear evidence that China is transferring from an investment-driven economy toward a consumption-driven one.

As China's saving rate is well over 40 percent, the consumption of Chinese citizens can increase by a large scale in the future.

A figure that particularly attracts my interest is the growth rate of online food ordering. It increased by 29.3 percent in the first half of 2019. Everyone knows that Chinese people are now ordering more and more takeaway food on the internet, but this growth speed is still very astonishing.

This almost 30 percent year-on-year growth rate shows investors how vivid the Chinese economy really is. Once a more efficient business model is created, it can grow at a rate of almost 30 percent among 1.4 billion people. This really tells us how efficient and market-oriented China's economy really is.

Overall, the Chinese economy is now growing at a healthy speed. This speed is indeed slower than before, but solidity rather than celerity is the most important thing for an economy that is in its deleveraging process.
 

styx

Junior Member
Registered Member
here's the link to what I read earlier today:
China's economic growth slumps to lowest in 27 years as the trade war hits
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kind of touching to say an economy "slumps" while growing 6.2% LOL

I think that is purely propaganda, i'm surprised that cnn follows trump in this campaign. China is the country that grows more in the world in this era in this year you can say all you want. China Grows more than usa than india than vietnam.
 
I think that is purely propaganda, i'm surprised that cnn follows trump in this campaign. China is the country that grows more in the world in this era in this year you can say all you want. China Grows more than usa than india than vietnam.
if I were you, I'd read Today at 5:19 PM
to my surprise, even GlobalTimes sounds kind of weary though:
Much potential remains for China’s economy
Source:Global Times Published: 2019/7/15 20:43:06
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vincent

Grumpy Old Man
Staff member
Moderator - World Affairs
I think that is purely propaganda, i'm surprised that cnn follows trump in this campaign. China is the country that grows more in the world in this era in this year you can say all you want. China Grows more than usa than india than vietnam.

No surprise at all:

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"One of the things we're trying to do is view the China threat as not just a whole-of-government threat, but a whole-of-society threat on their end," Wray said. "And I think it's going to take a whole-of-society response by us."
 
only now read this one, kind of forestalling (as you can see, it's from March):
China cuts 2019 GDP growth target, good or bad? Central bank adviser has an answer
Source:Global Times Published: 2019/3/11 22:51:55
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China has set a GDP growth target at 6% to 6.5% for 2019, which is consistent with the country's potential economic growth, an adviser to China's central bank said in an exclusive interview with the Global Times.

Instead of focusing on growth speed, we should look at China's GDP base. In the future, we can expect the country to set even lower growth targets, which is in line with the rules, Liu Shijin, deputy head of the 13th Chinese People's Political Consultative Conference National Committee's economic committee and a member of the monetary policy committee of the People's Bank of China, the central bank, told the Global Times on Sunday.

China has lowered its GDP growth target to 6-6.5 percent for 2019, as the country seeks to maintain stable growth amid downward economic pressure and as it continues to pursue major policy goals, according to the Government Work Report on March 5.

After years of high-speed growth, the Chinese economy has begun to shift to medium-speed growth, a change that is in line with China's economic growth pattern, Liu said.

China's GDP grew 6.6 percent to 90.03 trillion yuan ($13.25 trillion) in 2018, the fast pace among the world's five largest economies including the US, Japan, Germany and the UK, and China has contributed about 30 percent to global economic growth.

China's high-speed growth era has already ended, Liu said during the ongoing two sessions. "The GDP growth rate is forecast to remain above 6 percent this and next year, and to remain at 5-6 percent in 2020 and thereafter, or even around 5 percent," Liu said.

Despite the economic slowdown, the economy has been growing in absolute terms year by year, which will not lead to any problems in overall employment, Liu added.
 

Hendrik_2000

Lieutenant General
Well they spin it as if the lower GDP is due to trade war when the cause is somewhere else Even thought trade growth lower with the US but still increasing with the rest of Eurasia As well China is not so dependent on trade anymore as before No point in perusing day to day GDP growth the important indicator like consumprtion and production point to growth
Via Emperor

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McKinsey research finds the world becoming more exposed to China — but not the reverse

KEY POINTS

A report released this month by consultancy McKinsey and Company found that the world has become more exposed to China at a time when the Asian giant is increasingly relying on its own consumers to boost growth.

The report by McKinsey shows that consumption contributed to more than 60% of China’s growth during 11 out of 16 quarters — from January 2015 to December 2018.

In fact, net trade — the value of total exports minus that of imports — “actually made a negative contribution” to growth last year, the study finds.

Visitors to Tianzifang, a popular shopping and cafe enclave in the French Concession area of Shanghai.

Yen Nee Lee | CNBC

The world has become more economically exposed to China at a time when the Asian giant is increasingly relying on its own consumers to boost growth, according to a July report by consultancy McKinsey and Company.

The findings by McKinsey come as China is locked in a year-long tariff fight with the U.S. that has spilled into areas such as technology and security. Economists generally predicted that the Chinese economy — instead of the U.S. — will experience a larger hit from elevated tariffs partly due to the Asian country’s relatively heavier reliance on exports.

But the report by McKinsey found that consumption contributed to more than 60% of China’s growth during 11 out of 16 quarters — from January 2015 to December 2018.

That means China’s economy has been reducing its reliance on trade as a source of growth. In fact, the study found that China’s net trade — the value of total exports minus that of imports — “actually made a negative contribution” to growth last year.

“I think that’s one of the things they’re trying to do: To build a more robust, a more diversified economy,” Oliver Tonby, McKinsey’s chairman in Asia, told CNBC’s “Squawk Box” on Monday.

China’s exposure to the world in relative terms has fallen because the major driver of its economic growth is no longer trade or investment but rather domestic consumption.

MCKINSEY AND COMPANY
The consultancy studied how China and the world are linked through trade, capital and technology. It found that the increasing importance of Chinese consumers in supporting growth means manufacturers in the country are selling more to domestic consumers, and less to the world.

As a result, China exported just 9% of its output in 2017 — down from 17% in 2007, according to the McKinsey study. That shows China has become more self-reliant and less exposed to the rest of the world, the research found.

“China’s exposure to the world in relative terms has fallen because the major driver of its economic growth is no longer trade or investment but rather domestic consumption,” the consultancy said in the report. “The decline in China’s exposure also reflects the reality that the economy is still relatively closed in comparison with developed economies.”

chart 190715 mckinsey china-world exposure

In contrast, the rest of the world has become more dependent on China, the report said. Countries are either trading more goods with China or receiving more investments from Beijing, McKinsey said.

The consultancy identified three groups of countries that have the most exposure to China:

Asian economies such as South Korea, Singapore, Malaysia, the Philippines and Vietnam. Those countries are tightly connected to China in global supply chains.
Resource-rich countries such as Australia, Chile, Costa Rica, Ghana and South Africa, which export to China.

Emerging markets such as Egypt and Pakistan, which are highly exposed to investments from China.

“Sectors and countries with varying degrees of exposure to China’s economy could be more or less vulnerable to a changing relationship between China and the world,” McKinsey said. “The increasing exposure of the rest of the world to China reflects China’s increasing importance as a market, supplier, and provider of capital.”
 
it's actually interesting
BlackRock sees a tepid second-half China economy despite stimulus, citing trade war woes
  • Asset manager lowers China-linked emerging market equities, calling investors ‘overly optimistic’ about the effect of Beijing’s stimulus measures
  • Protracted trade war has become the single most important driver in the global economy and markets, firm says
Updated: 3:23am, 9 Jul, 2019
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BlackRock, the world’s largest asset manager, on Monday downgraded emerging market equities linked to China for the second half of the year, saying markets were “overly optimistic” about China's ability to boost its economic growth amid the trade war with the United States.

The firm, which manages more than US$6.5 trillion in assets, said it now sees “trade and geopolitical frictions as the principal driver of the global economy and markets” and expects China’s economy to experience “a lull” from the effect of US tariffs.

As recently as a month ago, New York-based BlackRock had a positive view of emerging market equities, saying “economic reforms and policy stimulus” could support the stocks.

It had argued that “improved consumption and economic activity from Chinese stimulus could help offset any trade-related weakness”.

But the firm has now changed its viewpoint largely because the year-old US-China trade war has become the single most important factor in the global economy and marketplace, it said in its Midyear 2019 Global Investment Outlook, released on Monday.

The US and China are now locked in a strategic competition that is structural and persistent, BlackRock’s researchers said.

The tensions go beyond trade, extending to a race to dominate next-generation technologies with implications for national security.

“China’s growth is finding its footing but looks to be at risk of staying sluggish due to the tariff fallout,” said Jean Boivin, head of BlackRock Investment Institute, which provides insights on the global economy and asset allocation to help clients and portfolio managers navigate financial markets.

While Boivin said he expects Beijing to be “quick to roll out fiscal stimulus to help underpin growth if the economy wobbles”, he said any stimulus will be “to stabilise growth, but not to accelerate it”.

Although it has a positive second-half view on US stocks, BlackRock now advises investors to avoid emerging market equities. It recommends they instead “dial down overall risk by raising some cash”.

While Chinese policymakers are expected to revert to trusted tools to boost growth, such as infrastructure spending and other fiscal stimulus, Boivin said that a significant monetary easing or sharp currency depreciation was “unlikely”.

Such measures “would run counter to Beijing’s prime objective to maintain financial stability and prevent a rerun of the destabilising capital outflows seen in 2015-2016”, he said.

The fallout from the trade war would be a potential rollback of the decades-long globalisation trends in China that gradually lowered inflation and expanded corporate profit margins.

If the result were a supply shock for which markets were not prepared, it could lead to negative returns in both equities and bonds, the researchers said.

“The uncertain macro outlook keeps us broadly underweight Chinese and China-related assets in the short run,” said Elga Bartsch, the investment institute’s head of macro research.

“Yet we see the gradual opening up of China’s onshore markets – and their increasing weight in global bond and equity indexes – as important sources of diverse returns for investors in the medium term,” Bartsch said.

Despite the weakened outlook for China, BlackRock still sees investment opportunities in emerging markets such as Brazil.

The firm also downgraded its global growth outlook for the second half of the year, saying the trade war could further weaken spending.

BlackRock cut its global growth forecast last year as the trade war picked up steam.
 
Jun 2, 2019
The village testing China’s social credit system: driven by big data, its citizens earn a star rating
Set to be rolled out by next year, the scheme is the nation’s most ambitious project in social engineering since the Cultural Revolution. Whether it eventually creates an Orwellian dystopia, or an honest, harmonious society, as intended, remains to be seen
Published: 2:00pm, 2 Jun, 2019
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is related to what I began to follow
Oct 25, 2016

(actually I now got to it by clicking from
May 15, 2019
and like going backwards)
now
Social credit system to set market access limit for dishonest individuals, firms
Source:Global Times Published: 2019/7/16 21:38:42
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China is advancing its social credit system through measures such as limiting market access for discredited people and companies while also expanding supervision and penalties, the central government said in a document released on Tuesday.

In sectors including pharmaceuticals, the environment, construction, production, and care for the young and elderly people, which are highly related to the safety of people's lives and property, authorities will carry out more strict supervision while expanding the scope of penalties.

Dishonest entities and those who failed to comply with judicial decisions or administrative penalties would be banned from entering those sectors, or be expelled from them for good.

China has been accelerating the full-scale establishment of a social credit system, with cities and regions coming up with detailed plans by including various information into individuals' social credit files such as support for elderly family members and properly sorting their garbage. A total of 14.09 million people had been blacklisted for bad credit records in China as of May.

The document also encouraged innovation in the social credit system, making full use of the internet and big data as major pillars for the supervision of the system.

China's social credit system has to be built on an information-sharing basis to improve tracking data for individuals and companies. China has built the largest credit system in the world, including information on 990 million people and 25.91 million companies and other organizations, according to media reports in June that cited the country's central bank.
 
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