Why China's economy will prove Western fearmongers wrong, again

BEIJING -- China is embracing an electric vehicle boom that backs its steady recovery and leads a global zero-carbon push.

The country is by far the largest EV market in the world, home to an estimated 200 EV manufacturers. In 2022, more than 60 percent of global electric car sales took place there, and more than half of all EVs on the road worldwide are currently in China.

An EV boom portrays China's efforts in industrial transformation and upgrade. That is not China's only "First" in the global economic tally, there are other "No.1"s about the Chinese economy, which has managed to forge ahead and set records despite challenges.

Official data show China has overtaken Japan to be the world's biggest auto exporter, with vehicle exports soaring to 1.07 million units in the first quarter of 2023.

China surpassed the United States as the largest single market for iPhones with the most shipments in the second quarter of 2023, according to market analysis site TechInsights.

China has outperformed Greece, becoming the world's largest ship-owning country in terms of gross tonnage, according to the China Shipowners' Association.

But the second largest economy is lately finding it hard to get a word in edgeways, as some in the West are again singing the blues and putting that on repeat.

In their blues, they try to create a sentiment of gloom and doom about the Chinese economy and send it down across the wider global market, with such depressing lyrics as "systemic crisis," a "ticking time bomb," or even a "deflationary trap."

The real picture is hardly what they painted from their one-sided, short-term lenses. Market trends and financial price moves are telling a different story to their bearish forecasts.

Financial reports show Starbucks saw a sharp recovery in China in Q3, L'Oreal sees the Chinese market as "really picking up," and luxury giant LVMH logged a strong rebound in China in the second quarter.

"Domestic tourism is broadly picking up. Car sales in China are still up this year despite a small decline in June and July. Alibaba just reported a return to strong sales growth in its second-quarter results. Yet more signs of an economy that is not imploding," The Financial Times wrote in its recent markets insights.

From a stock market perspective, it also noted that over the past 12 months, Chinese bank shares have actually outperformed US banks by 12.6 percent in dollar terms.

"There seems to be a strong disconnect between the price behavior of most China-related assets, whether at home or abroad, and fears of an unfolding systemic crisis," it said.

In fact, China's growth momentum has been there and its economic fundamentals are solid. In the first half of the year, China recorded a 5.5-percent GDP expansion, the fastest among major economies globally and a hard-won performance amid a complicated external environment and a sluggish world economy. In June, the World Bank raised its China growth forecast to 5.6 percent from January's projection of 4.3 percent.

Yet some observers in the West are "selectively blind" to these numbers, but are "clear-eyed" about certain fluctuations. All they see is a fall in China's consumer price index in July, the first time in more than two years, based on which they've been manufacturing a deflation fear.

Nicholas Lardy, a senior fellow at the Peterson Institute, a US think tank, said that it was "premature" to make a judgment of deflation based on single monthly data, while a thorough assessment of the situation also "does not support the view that China's economic growth is in a severe cyclical downturn."

Perhaps, doomsayers don't really care if the Chinese economy fares well or badly. They are bent on magnifying challenges, mongering fears and killing confidence.

But that confidence is rebuilding as China firms up its resolve for broader, higher-level opening-up.

In mid-August, China rolled out guidelines containing 24 specific measures to further optimize its foreign investment environment and beef up foreign investment inflow.

The second largest economy accounts for about 18 percent of the world's total and has contributed some 30 percent to global economic growth in recent years.

With the most comprehensive range of industries, the most complete industrial system, and the largest middle-class cohort in the world, the country is also the major trading partner of more than 140 countries and regions.

It's not to deny the challenges ahead. The country still needs to redouble efforts to expand consumption, bolster the private sector, and attract foreign investment as it integrates itself deeper into the world economy.

A weaker momentum is not unique to China, but China is not letting it rot. Over the past 40 years, the Chinese economy has created a global marvel. However, this does not mean that the economy was all plain sailing these years. Rather, the development was achieved by overcoming one challenge after another.

One epitome is the growth of the Shenzhen-based BYD, which started with manufacturing mobile phone batteries, into one of the world's most advanced producers of automobile batteries through years of dedicated efforts.

And a key to understanding China's relentless economic development lies within these impressive stories.