The economic woes of China have been something we’ve spoken about before on our blog. The country has the second-largest economy in the world and trade relations with all countries, including even the isolated North Korea. However, China’s growth slowed down over the past seven years, causing global concerns. This even contributed to the oil crisis of 2015, since China did not need as much oil products as OPEC was making, thereby causing an oversupply. Nevertheless, this week brought good news from China, indicating that its economy grew for the first time since 2010.
Yesterday China published its GDP data for the last quarter of 2017. With this, the estimate for economic growth in China for the past year comes at 6.9% compared to 6.7% in 2016, exceeding investors’ expectations. Trade was particularly important to Chinese economic growth, as improved export outputs likely led the increase.
Nevertheless, some analysts have begun to treat Chinese economic data with distrust over the last few years. China is, after all, ruled via a totalitarian regime and the government has complete control over the media. Experts have argued that China’s economic growth is more constant year by year, without significant increases, and based on global data are more willing to put the estimate at around 6%, rather than the official 6.9%.
The economic climate of China is likely improving because of the overall better condition of the global economy. Countries are doing well in shaking off the fallout from the economic crisis of 2008 and the financial markets have been improving overall. Over the past four years the American dollar and the euro have both grown, and Japan is also working towards increasing inflation. China as a massive exporter of goods would naturally be doing better when its trading partners are stable enough to buy its products.
Still, not all is well in China. In order to stimulate growth previously, China allowed many of its businesses lax borrowing rules, so right now the country is dealing with a massive debt which exceeds the Chinese economy in value. If the government takes measures to settle these debt issues, this could harm businesses and lead to a slowdown. Another source of trouble for China is US President Trump. Ever since his presidential campaign, Donald Trump has pointed an accusing finger at China, dissatisfied with the way China seems to dominate global trade. Even as President of the United States, Trump has stated he wants more protectionist policies with less imports from China. If this happens, China might find itself in a tough spot, as the vast American market is quite valuable for the Chinese economy.
Whatever the true numbers about the growth of the Chinese economy might be, we cannot deny that the entire world is affected by China’s economic climate. This is why it is important to follow the news, especially the rhetoric between China and the United States when it comes to global trade.
