When reading this New York Times piece about economic growth in China one might come away with the impression that the country is trending towards a recession.
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China’s Economy Is Slowing, a Worrying Sign for the World
Economic output climbed 4 percent in the last quarter of 2021, slowing from the previous quarter. Growth has faltered as home buyers and consumers become cautious.
BEIJING — Construction and property sales have slumped. Small businesses have shut because of rising costs and weak sales. Debt-laden local governments are cutting the pay of civil servants.
China’s economy slowed markedly in the final months of last year as government measures to limit real estate speculation hurt other sectors as well. Lockdowns and travel restrictions to contain the coronavirus also dented consumer spending. Stringent regulations on everything from internet businesses to after-school tutoring companies have set off a wave of layoffs.
China’s National Bureau of Statistics said Monday that economic output from October through December was only 4 percent higher than during the same period a year earlier. That was a deceleration from the 4.9 percent growth in the third quarter, July through September.
The world’s demand for consumer electronics, furniture and other home comforts during the pandemic has produced record-setting exports for China, preventing its growth from stalling.
Note all the negative attributes sprinkled into nearly every sentence. China's economy must be in really bad shape.
Up to that point the piece has not mentioned its core data point – which is sensationally good and should have been in the headline.
That follows only now, after the reader has been sufficiently prepared to think it is actually bad. The sensationally good data point gets immediately dampened with another negative sentence.
Over all of last year, China’s economic output was 8.1 percent higher than in 2020, the government said. But much of the growth was in the first half of last year.
8.1% growth, after 2.3% growth in Covid 2020 seems excellent to me. It is beyond the 6% target the government had set and higher than previous estimates. For China it is the fastest growth rate in a decade.
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Overall the decades the GDP growth trend in China is moving down. This is normal for societies without population growth when they come near to their upper economic potential. In one or two decades China is likely to have consistent growth rates of around 2 to 4% with small recessions sprinkled in every now and then.
For now China's Central Bank is pushing for even higher growth:
China will open its monetary policy toolbox wider to maintain the stability of total credit, Liu Guoqiang, a deputy governor of the People's Bank of China (PBC), the country's central bank, said on Tuesday, vowing to roll out more pro-stability policies until the downward pressure on the economy is fundamentally eased.
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In a fresh easing move, the PBC on Monday lowered the rate on seven-day reverse repurchase agreements by 10 basis points (bps) to 2.1 percent and cut the interest rate on the one-year medium-term lending facility (MLF) to 2.85 percent from 2.95 percent.The reduction in the two key policy rates was the first in about two years.
Moreover, according to Liu, commercial banks will submit optimal quotations for the loan prime rate (LPR) on Thursday. The LPR, the de facto benchmark lending rate, is updated on the 20th of every month, which falls on Thursday this time.
Unlike the 'western' central banks which printed money and lowered rates to under 0% to save their financial markets, China still has ways and means to expand its economy. Its building sector is overindebted and a bit shaky but will not be allowed to come crashing down.
The NYT tends to write in a negative tone about the economies of all perceived U.S. 'enemies'. It is a huge mistake as it leads to delusions in U.S. politicians and leaders.
When former Senator John McCain called Russia 'a gas station masquerading as a country' he demonstrated the effects of such indoctrination.
Russia is the worlds fourth biggest electricity producer directly behind the much bigger China, United States and India. It is number five in global steel production with only 2% less output than the United States. Its official GDP numbers in U.S. dollar look lower than Italy's. But an estimated one third of Russia's economy is running informal and off the books and, corrected for that, its GDP at purchase power parity is bigger than Germany's.
Readers of the New York Times and other U.S. media do not learn such things. That is why they underestimate what they are up to when they push for conflict with Russia or China. The lack of real knowledge about the world is what creates bad foreign policies.