China’s economy will be presented in a good shape in six weeks

September 12, 2017, by Hubert Fromlet, Kalmar

After the German general election, China’s National Congress will be another major globalt political event. The various sessions start on October 18, revealing also the names of the new Standing Committee of the Politburo. This will be an extremely important event and will give us further indications on China’s future economic reform policy.

It also seems to be a safe prediction that the two remaining two members of the Standing Committee, President Xi Jinping and Prime Minister Li Keqiang want to present China’s economy in a positive shape in the middle of October.

Looking at China’s latest economic statistics, these ambitions can be met – at least on the paper. Some examples can be mentioned:

– GDP +6.9%, q1-2 2017, stabilized growth downturn (2010: +10.6%);

– industrial production +6.8%, 2017/1-7, probably reflecting structural progress in industry (2010: +15.7%);

– retail sales +10.7%, 2017/1-7, shrinking growth but still not bad (2010: +23.3%);

– fixed investment +8.3%, 2017/1-7, necessary slowdown (2010: +23.8);

– gross exports on dampening trend but in 2017 slightly stronger than in 2016 – and still surplus in the current account in July 2017 (+0.7% compared to 3.9% of GDP in 2010);

– stabilization of the still very high currency reserves after a period of shrinking numbers (billion 3081 USD in July 2017).

When it comes to government budget deficits, it is often unclear whether local governments are included in statistics or not (usually not because of more favorable debt numbers for the central government). Officially, the Chinese consider public fiscal debt being under control.

To summarize, official statistics confirm that a remarkable and officially desirable downsizing from the overheating year of 2010 has been taking place.

But how much in reality? This we really cannot know because of all the statistical shortcomings. Anyway, China’s political leaders will present an economy at the National Congress six weeks from now in line with objectives and positive expectations.

There will be no alternative to this description – despite still existing needs od structural changes and reforms. However, most of these structural challenges and reform needs will be mentioned by the political leaders. This kind of economic openness has indeed improved in the past few years.

Hopefully, I won’t be wrong on this latter point.

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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