Do Not Ignore The Positive Side Of China’s Economy
Recent financial volatility has clouded the Chinese economy, but people need to view the bright side if they want the full picture.
Chinese officials do deny that the world’s 2nd largest economy is facing trouble, it is not easy to deliver an annual growth of around 7% after 30 yrs of rapid expansion.
It is true that China’s traditional competitiveness is fading on rising labor costs and tougher measures to protect the environment, but some Western analysts overstated this.
They expect a “hard landing” or even a collapse of the Chinese economy, as the stock market dive, and a weaker RMB Yuan fuel the pessimism.
The G-20 finance ministers and central bank governors, representing 85% of the global economy, reached consensus last week that there was no reason to fear slower Chinese growth.
These senior policymakers see a different picture than the pundit and media pessimists because they paid enough attention to signs of improvement in the Chinese economy.
China’s real estate sector continues warming this year, despite repeated stock market corrections since mid-June.
In August, prices for new homes in 100 Chinese cities rebounded after 10 months of declines. Sales are increasing.
Property is of greater significance than stocks to economic growth and financial stability as real estate is one of China’s pillar industries, widely used as collateral for bank loans.
In August, power generation rose to the highest level this year, rail freight edged up, steel production and prices began to grow following 4 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%.
While manufacturing PMI in August fell below 50, the expansion-contraction line, sub-PMI for high-end manufacturing and consumer goods production came in at 52.2 and 54.6, indicating strong vitality.
Production of new energy vehicles, bullet trains, “smart” electronic devices, photovoltaic products reported robust growth, while polluting cement and plate glass dropped substantially.
Chinese cinemas are crowded with moviegoers, restaurants filled with customers and tourist attractions at home and abroad full of Chinese visitors.
Market researcher BCA said overseas travel, cinema box office revenue and e-commerce in China are all seeing “explosive growth”.
All these signs show the country is transforming with painstaking efforts 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 2nd largest economy. It is possible for this giant nation to sustain strong growth for a long time to come. As its market potential is huge and the country is far from high-level industrialization and urbanization.
Do not be fooled 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.
Stay tuned…
HeffX-LTN
Paul Ebeling
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