Crisis In China? There Is No Crisis

For years, China’s economy soared with double-digit growth. Even during the last financial crisis, the Middle Kingdom showed certain robustness. Some weeks ago, the latest official numbers were released, provided by Chinese government departments such as the National Bureau of Statistics, Ministry of Finance, Ministry of Commerce, and Ministry of Human Resources and Social Security. And it seems they are indeed still pretty good.
The numbers show that, step-by-step, the Chinese want to come closer to international standards. It seems to be even more important because these numbers indicate a determination to have more stable and sustainable growth. On top of that, they reflect the distortion of the country’s policy during the last decade and the transformation towards a more realistic economy.
For 2013, the projected figures showed an increase of “only” 7.5 percent. Some strange comments about China’s economic achievements have been on the front pages of many economics newspapers and magazines around the world. Some papers even reported that China’s engine is slowing down.
What? Official sources say that the “Gross domestic product (GDP) expanded by 7.7 percent year on year up to 56.88 trillion yuan (9.32 trillion US dollars).” This is even 0.2 points better than the government’s 7.5-percent target. However, a main indicator of inflation is the consumer price index (CPI). And many people, including those in the textile machinery industry, were afraid that inflation in China would rise dramatically and jeopardize the development of the country’s economy — and, consequently, foreign trade.
Foreign direct investment (FDI) is an indicator of whether investors believe in a country or not. Last year, FDI in China climbed another 5.25 percent up to US$117.59 billion. According to official figures, industrial value-added output in real terms went up 9.7 percent; fixed-asset investment, up 19.2 percent to 43.65 trillion yuan; and retail sales of consumer goods, up 11.5 percent to 23.44 trillion yuan.
Government officials are not afraid of the very moderate slowdown. It is rather the contrary: Comments from the top levels of the administration indicate that they are more willing than their predecessors to accept some slowdown in order to be ready for long-term challenges and a more sustainable future. The next gathering of National Committee of the Chinese People’s Political Consultative Conference (CPPCC) in Beijing will tell more.

January/February/March 2014