I thought that Philip Pilkington made a very good point in a piece at UnHerd. Maybe China’s economy is doing just fine and the Western press is continuing to print the story that the Chinese economy is flagging when the evidence doesn’t actually support that conclusdion:
Open a Western business newspaper and one would probably come away thinking that the Chinese economy is doing poorly, or perhaps even on the verge of collapse. While it is true that the country’s economy continues to suffer from structural problems, this perception is not just wrong but risks undermining the credibility of Anglophone publications and the capacity for our policymakers to make rational decisions.
Last week Chinese price data showed mild deflation, a data point out of which the Western financial press made hay. “China’s deflation worsens as economic pressures mountâ€, read the Financial Times headline. Bloomberg ran with “China’s consumer price drop worsens, fuelling deflation fearsâ€. The mild deflation that is taking place in China does indeed stem from structural problems in the economy — especially the fact that it is overly reliant on investment spending and insufficiently reliant on consumer spending. But, at a certain point, the negative press becomes outright misleading.
Two other data points were released last week which show the Chinese economy growing robustly. The first came from the private sector Caixin Services Purchasing Managers Index survey, which showed stronger than expected growth in the very sector about which bearish commentators have raised concerns.
Interestingly, the private sector surveys of the Chinese services sector show it expanding quicker than the official Chinese government studies which showed a mild contraction in November. Those who accuse the Chinese of inventing economic statistics would do well to explain why government surveys are more conservative than their private sector equivalents. Whatever way one looks at it, the Chinese services sector is now expanding.
Then there is Chinese export data, which showed exports expanding for the first time in seven months. Combined with the service sector data, this shows a broad-based expansion of the Chinese economy. Not a veritable economic boom, it must be stressed, but continuous growth that is consistent with the IMF’s own projections. These show that Beijing will comfortably meet its 5% growth target this year — a projection China bears seem to ignore when they pass judgement on the economy.
I wish the Chinese people well but I don’t actually care whether China’s economy is growing, shrinking, booming, or collapsing and I don’t honestly know how we could tell. I think we need to formulate policy based on U. S. needs and U. S. interests rather than on what may or may not be happening in China. Furthermore, I think those needs and interests tell us that we need to buy less from China not more and we should take steps to accomplish that regardless of the state of the Chinese economy.
