China's economy not gloomy, as some say

There have been many gloomy opinions voiced about the Chinese economy in recent months, with some analysts and economists in the US saying China's growth engine is sputtering, with likely adverse consequences for global development.

In response, China's top envoy in Washington published an op-ed piece in The Washington Post on Thursday, titled "The Chinese economy is doing better than you might think."

To understand how seriously those outside of China think about its economic woes, a New York Times report on Aug 11 carried the headline, "China's Stalling Economy Puts the World on Notice".

It said that as China's economy flashes signs of decline — such as slowed growth in the spring and contracted exports in the second quarter, the consequences pose perils for countries globally.

Just a day before, US President Joe Biden misstated China's growth rate at a political fundraiser, where he called the world's second-largest economy a "ticking time bomb" because of its economic challenges.

"China is a ticking time bomb ... China is in trouble. China was growing at 8 percent a year to maintain growth. Now close to 2 percent a year," Biden said in Utah.

China's gross domestic product grew at 5.5 percent in the first half of this year, according to its National Bureau of Statistics.

Xie Feng, Chinese ambassador to the US, noted in his article that the country's growth rate has outpaced most major economies, and as it has for many years, China remains a highly important engine of global growth.

Citing BCA Research, the leading independent provider of global investment research, the envoy said China has been the source of more than 40 percent of global growth over the past decade, compared with 22 percent from the US, and 9 percent from the eurozone.

He noted that for many years, some people have dismissed China's contribution to global growth — or even hyped the "threat" from a growing China.

"Now, as China is undergoing temporary economic adjustments, some blame China for dragging the global economy down; others advance the 'China may collapse' theory. Is this fair?" Xie wrote.

He said that as the world is yet to recover from the trauma caused by the coronavirus pandemic, and the Ukraine conflict is dragging on, every country has its own problems to tackle.

"In a globalized era, bad news for anyone is bad news for all. Countries need to pull together to advance economic globalization and build a community with a shared future for mankind where no one is left behind," he wrote.

The ambassador conceded that the road to post-COVID recovery will not be smooth, but rather have undulating progress, often with twists and turns.

"In China, we do not shy away from problems. Rather, we address them head-on," he told readers.

The Chinese government has "ample room" in its policy toolkit to forestall systemic risks. For example, it has rolled out new policies to reinvigorate consumption, boost the private sector and attract more foreign investment, according to Xie.

"One of our priorities is to prevent and defuse financial risks, including policies to ensure the steady and sound development of the real estate sector. Such efforts are gradually paying off," he wrote.

He noted that while transnational investment is lackluster globally, investment in China from overseas continues.

For example, France, Britain, Japan and Germany boosted investment in China in the first half of 2023 by 173.3 percent, 135.3 percent, 53 percent and 14.2 percent, respectively.

In particular, half of Tesla's global deliveries came from its Shanghai gigafactory last year, which rolls out one electric vehicle every 40 seconds on average, and Starbucks now operates more than 6,500 stores in China, opening one nearly every nine hours.

"As China continues to upgrade consumption, ease market access, optimize the business environment and strengthen supply and industrial chains, the fundamentals sustaining its long-term growth remain unchanged," he concluded.

Despite a spate of gloomy assessments of the Chinese economy in Western media, there also are discussions about seeing the country's economic status quo in perspective, and how a stable Chinese economy benefits the US.

In a column in the Financial Times on Sunday, Louis-Vincent Gave, the chief executive of the China-focused economic consultancy Gavekal, noted that markets are not signaling doom and gloom for China's economy, and financial price moves are telling a different story to some of the more pessimistic forecasts for the country.

Gave looked at the performance of banks. As in most financial crises, the share-price performance of banks starts signaling trouble months before a systemic crisis unfolds.

But over the past 12 months, Chinese banks have actually outperformed US banks by 12.6 percent in dollar terms.

"So what does one call an emerging-market systemic financial crisis in which local banks are up on the year and outperforming US banks by double digits?" Gave wrote.

In a preview analysis on US Commerce Secretary Gina Raimondo's visit to China, which ended Wednesday, CNN reported that for the United States, a stable Chinese economy is also in its interest.

The Aug 24 report said American companies have huge manufacturing networks in China and rely on Chinese consumers.