China’s macro-economy resilient and promising
Dr Mehmood Ul Hassan Khan
Despite Western propaganda about the so-called “weak” prospects of the Chinese economy, the Chinese economy continues to recover, and it is picking up the pace according to many regional and international research studies and published reports (2022).
Unfortunately, geopolitics has staged a new game theory pertaining to US unilateral sanctions against Russia and the chessboard of power politics in the world has also inadvertently disturbed global supply chains of food & energy and subsequently posed a threat to economies, communities and people alike living around the globe. In current economic conditions, China has emerged as an economic powerhouse and stimulator of the global economy.
People’s Bank of China shared that China’s annual GDP surpassed RMB 114 trillion (US$ 16.9 trillion) in 2021, representing an increase of RMB 13 trillion (US$ 1.9 trillion) from a year ago.
Furthermore, according to the People’s Bank of China all indicators of macro-economy remained strong, stable and sustainable which shows the utmost resilience of the Chinese economy against all internal and external shocks.
That is why China’s total GDP reached RMB 27 trillion (US$ 3.9 trillion) with a growth of 4.8 percent in Q1 2022. Total fixed asset investment reached RMB 10.4 trillion (US$ 1.5 trillion) and increased by 9.3 percent and total real estate investment went up 0.7 percent to reach RMB 2.8 trillion (US$ 414 billion).
In addition, PMI dropped to 49.5 percent in March 2022 and industrial added values increased by 6.5 percent in Q1. On the other hand, total retail sales of consumer goods increased 3.3 percent to reach RMB 10.8 trillion (US$ 1.6 trillion) in Q1. It clearly indicates a substantial increase in the industrial growth of the country which is a good omen for the regional as well as the international economy.
Interestingly, imports and exports increased by 10.7 percent to reach RMB 9.4 trillion (US$ 1.4 trillion) and last but not least, PPI increased by 8.3 percent and CPI up 1.5 percent in March. Thus, the journey of successful socio-economic recovery has been further streamlined, systemised and stimulated in China which has now become a pioneer for global economic recovery.
The steady growth in the external sector of the Chinese economy was further reconfirmed as China's General Administration of Customs (GAC) data shows that trade is now getting momentum up to 9.4 percent. It means that COVID-19, US unjustified trade/economic, financial sanctions and the unending Russia-Ukraine conflict could not dissuade economic growth of China.
This shows effectiveness of China’s constant structural reforms and holistic economic policies to cope with all internal challenges and external shocks. It also showcases the worldwide popularity of Chinese goods in terms of superior quality, affordability, compatibility, competitiveness, easy access and last but not least easy & smooth supplies in other countries due to which its exports are on the rise.
According to the most recently released customs data (June 2022) China's trade increased by 14.3 percent year-on-year to RMB 3.7 trillion (US$ 547 billion) in June, compared with 9.6 percent growth in May.
In a nutshell, the country's total imports and exports increased 9.4 percent on a yearly basis to RMB 19.8 trillion (US$ 2.9 trillion) in the first six months of 2022, outpacing the 8.3 percent growth in the January-May period. Moreover, exports surged 13.2 percent over the period, surpassing economic experts forecast of 12 percent and imports grew 4.8 percent.
Interestingly, economic recovery in the Yangtze River Delta is commendable. Although the region achieved below-average growth during COVID-19, the vast delta has witnessed growing economic activities thanks to persistent economic structural reforms, people-centred policies, social protection mechanism, qualitative health capacity building measures along with the best pandemic prevention and control strategies.
Moreover, a comparative study of the Chinese customs data revealed that total imports and exports of east China's Jiangsu, Zhejiang, Anhui provinces and Shanghai in the Yangtze River Delta were RMB 7.14 trillion (US$ 1.05 trillion) in the first half of this year, a year-on-year increase of 9.3 percent. Moreover, the region's foreign trade in June was RMB 1.39 trillion (US$ 205 billion), a year-on-year increase of 14.9 percent, which contributed nearly 40 percent to the national foreign trade growth. Undoubtedly it remained positive, productive and futuristic. So, a steady increase in exports of this region has further consolidated the economic prospects of China.
The reasons behind the phenomenal rise in the trade sector of China are multiple. Despite high inflationary trends in the region and around the globe increase in consumer demands, drastic fall in sea freight costs and worldwide recognition of Chinese brands and products are the main reasons.
Furthermore, lower costs, user-friendly products and suitable incorporation of artificial intelligence technologies and global high inflation have attracted regional as well as international customers to Chinese goods.
It is an economic reality that Chinese products having relatively lower prices play a huge role in helping mitigate the inflation pressure. In this connection, the higher inflation in the US and Europe has encouraged international communities to buy more and more Chinese products.
Furthermore, China has succeeded in obtaining some comparative advantage in the new phase of tech industrial competition led by new energy vehicles (NEVs). It seems that the NEV industry's rise would push China's vehicle exports to surge to a new level.
Interestingly, according to a June report by the China Association of Automobile Manufacturers China has exported about 1.2 million vehicles, up 47.1 percent on a yearly basis which is a good omen for the Chinese industrial growth and overall economic recovery.
To conclude the Chinese government has pursued meaningful policies which are interactive, integrated and interrelated and succeed in stimulating Large Scale Manufacturing (LSM) in the country especially in the hardest hit region of the Yangtze River Delta.
Moreover, the authorities have supported local manufacturing and trade companies in terms of tax exemptions, incentives and necessary financial push-back simulations which helped avoid spillover repercussions of the Shanghai lockdown to unclogging logistics and supply chains during the pandemic and yield prominent dividents.
An ideal combination of internal gearing up of industrial productivity and rebounding demands and orders from overseas clients have also contributed to the rising trade in China which vividly reflects its strong economic foundations and diversification of export mix.
The extraordinary trade growth of China would deliver extra momentum to the country's overall economic growth and bring China's GDP closer to its target of 5.5 percent set at the beginning of this year. This will definitely increase market confidence in China’s economy.
The writer is Director: The Centre of South Asia & International Studies (CSAIS), Islamabad, Regional Expert: Central Asia & South Caucuses.