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China’s GDP grows 6.1% in 2019 despite trade war sting [Copy link] 中文

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Post time 2020-1-18 10:31:17 |Display all floors
(Global Times) The Chinese economy grew 6.1 percent for 2019, in line with the 6-6.5 percent goal as the world's second-largest economy demonstrated resilience with an improved structure to cap a year marked by a US-driven trade war, official data showed.

Overall, China's GDP grew 6.1 percent to 99.09 trillion yuan ($14.4 trillion) for 2019, according to data from the National Bureau of Statistics (NBS).

Friday's GDP reading indicated a continued slowdown for China's economic growth from 6.6 percent in 2018 and 6.8 percent in 2017.

It is the weakest reading in 29 years but in line with the 6-6.5 percent annual growth target.  

China's GDP expansion in 2019, at about 9.06 trillion yuan ($1.32 trillion), exceeded the 2018 annual GDP of Mexico, the world's 15th largest economy.

In the fourth quarter of 2019, China's economy expanded 6.0 percent year-on-year, compared with the 6.0 percent growth in the third quarter, 6.2 percent in the second quarter and 6.4 percent in the first quarter.

The data is closely watched by global markets analysts and is used to gauge the performance of the world's second-largest economy in a year characterized by slow economic growth and contracting trade. It is also used to access China's growth potential for 2020, which is expected to be a challenging year.  

"The newly released data was basically in line with market anticipation, or even better than some institutions have forecast," Lian Ping, chief economist at Bank of Communications, told the Global Times on Friday.

Chinese economists said the growth was the result of the country's improved economic structure which included a steady transition from manufacturing to the services sector. Financial deleveraging and debt stabilization from the past two years also helped.  

The resilience of China's economy in 2019 reflected the continued strength of private consumption spending, supported by a wide range of monetary and fiscal policy stimulus measures, said Rajiv Biswas, APAC chief economist at IHS Markit.

China's total retail sales of consumer goods rose 8%year-on-year in 2019 to hit 41.16 trillion yuan ($5.99 trillion), Friday's data showed.

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Post time 2020-1-20 06:17:40 |Display all floors
Trump's trade war on China had created business uncertainty across the globe. Therefore the Phase 1 deal has brought back enough relief to economies and they are now renewing their investments into China again on the back of her own front loading of infrastructure investments in the last two years which were made in tandem with her other precise stimulus measures.
While her imports will be rising this year from her second round of opening up, investors will find greater persuasions to inflow more funds not just into her financial services sector but also into other areas of demand such as technology development including her tech start-up's.

A renewed confidence is also sparking up more household spending bolstered by the three factors of income, credit and sentiment now turning positive, furthermore spurred by her net exports performance last year which had grown instead of sliding, to the grudging surprise of many in the west.

In line with her progressive and step-by-step approach to structural reforms including new emissions standards, her automotive industry is showing signs of increased activity in the non-electric segment while its electric models segment will soon be given a filip when China's 5G movement spreads rapidly in all her urban sectors. China's automotive market remains the world's biggest and it will drive the recovery and transformation of the world's automotive industry.

Similarly, China's domestic output in semiconductors increased by 30% last year, no doubt spurred by the US restrictions and attacks on its tech exports to China, thereby triggering her patriotic awakening on the need for self-sufficiency and technology autonomy in order to protect her companies from future blackmails such as visited on her ZTE by the US.

Meanwhile her construction industries have recovered and with housing loans up by 17% last year, her property market will stay on an even keel as buyers sponge up vacant units moving in-west to support the BRI to Europe and the Indo-Pacific.

Trump said his Phase 2 deal will be negotiated round about his reelection. That's in November this year. While his senate majority may ring him from the impeachment charges filed by the US Democrats, the US voters including those in their manufacturing rust belts are finding out for themselves that shopfloor jobs have not returned to the US but instead have remained overseas, production costs have increased because Trump has still retained his 25% tariffs on imports of China's industrial tools, parts, machinery and materials, and prices of consumer goods will surely rise this year when US importers of China goods can no longer absorb the tariffs that the US has been imposing on China goods, exemption lists notwithstanding.

Meanwhile, US tech companies will have to weigh whether the Trump administration is really on the side of their survival. The upticks in their share prices are but a punter's tic because the landscape of their market is moving more ground from west to east. Unless they increase their investments where their markets are, Trump's unilateralism based on his right-wing populism which itself is creating a rift in the US masses will only create counter-responses by other nations whose technology markets are furious at US trade and technology sanctions. So companies like Oracle and Amazon shouldn't try to suck up to Trump by trying to tar China. Two tries don't make one birdie.

That besides the other international challenge coming up this year, namely the digital services tax war that will engulf the entire world for all that the OECD may care to resolve. For instance, someone has calculated for such a company which makes 12% profit margin, just a 3% digital service tax imposed by the consuming country where the profit is derived will come up to 25% on the company's net income because the digital service tax is computer based on gross revenue and also not based on home country tax schedule.

I'll try to add some thoughts next in the US Unilateralism thread.










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Post time 2020-1-21 09:39:24 |Display all floors
The use of GDP as a measure of economic growth must be qualified because its performance is subject to the law of big numbers. If the base population was underdeveloped in the beginning, its growth would have been naturally very fast. But over time, the growth rate would naturally subside due to reducing incremental returns - unless new engines of growth are found or developed necessary to bypass the middle income trap. For a country as big and populous as China, economic strategies to become a moderately prosperous nation must necessarily develop further her middle income groups while lifting up her many peoples who are still poor, a number which is bigger than the total population of North America, for instance.

The west has been printing their money more to play their stock markets in an attempt to bolster confidence in their economies without addressing fundamental challenges needed to be overcome in order to spur real growth. Challenges such as right training to keep manpower skills relevant to market trends, optimized investments to modernize steel, concrete, transport and fibre infrastructures, and continuous innovation that can be mass-commercialized at affordable prices for populations already having to pick up their mess left from their last financial crisis caused by a disproportionate focus on trying to take shortcuts to more wealth by financial plays than real hard inspired work.

China, on the other hand, and similarly with other countries which have experienced the devastating collateral effects from the excesses of the west, have been working hard to overcome those challenges and keeping the eye focused on what really needs to be done for their peoples, industries and economies, even as the more advanced countries flail and flounder in their increasingly wild attempts to put her down by misfitting, misguided and misfiring deeds and words. In short, they are trying to bring her down to their level....
.....So, with that pinned up as the background, what can be done next, going forward after this Phase 1 deal signing?

For one, China must assume the US will try its utmost to make her completely dependent on US technologies so she must develop her own as quickly as possible looking at a number of factors, namely US private sector R&D is circumscribed by short-term fast returns, furthermore skewed towards bourse sentiments as measure of wealth generation when what is fundamental are the applications, affordability and scalability of the products - which remain exactly the weakness of their entire technology pipeline, something they can overcome - if they collaborate with their collaborators in China with whom they have been working smoothly before until Trump.

And then, there's the matter of a second opening up. The deal proscribes there is a mechanism for bilateral arbitration on any dispute in fulfillment. That pre-requires a stable and friendly relationship. Since it is the US which has been antagonistic from day one, it must dial down its aggressiveness to be superiorist on an arrangement which requires both to be equal and mutually respectful. Unfortunately people like lighthizer in front and navarro in the back have still not signified they understand the knife-edge on which the deal stands.

On which matter, three - buying more from the US must mean buying less from other countries with which China has already signified interest that was in the first place caused by the US making its globally ruining demands on China. The upheavals to the word of agreements has thus been internationally distorted by a US hellbent on getting what it assumed it had lost from everyone when believing so would be a megamyth of mythical proportion since if true, it would mean US companies big and small have not been getting anything in equivalent value for themselves as industrialists, financiers, service providers and traders.

So, will Phase 2 see the US hawks next beam in on China's SOEs? There's something which can be commented on this. It could be whether China can privatise them but in such as way as to bypass the negative effects of west-type privatization. For countries like China, moving SOEs into the private sector has to accommodate their social functions of alleviating many from poverty while keeping lids on any spikes in prices and rates. There are of course some advantages in greater efficiency and productivity but would increasing domestic competition not harm those others which are already trying to overcome the effects of Trump's trade War on China before the Phase 1 deal?

Maybe there's a new way to resolve this that is hidden in the way how SOEs and private sector can coexist at the common objective level while State can remain central to continue developing international relevance, domestic efficiency and social responsiveness.








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Post time 2020-1-21 21:07:47 |Display all floors
Redolent of the US' camped containment of its Japanese residents during WWII, there seems to be some ethnic containment of China technology staff in its Silicon Valley companies these days, reflecting servitude by barring them from working in cutting-edge areas or from promotions to higher positions beyond coding work. They may well see the writing on the wall and pack up to return home. Plainly, in the 'land of opportunity', American exceptionalism however means 'except you' even when the staff is smart, hardworking, productive in results and sterling in contributing to the company. Like the China railroad builders of California long ago.
Those China engineers and technologists should return home and help China's startups collaborate with those American fail-starts who have encountered stoppage in selling their expertise and product to US venture capitalists and all this can be done in a new Startup Talent program that is a jv project based in China but resuscitative of US technologies which can be collaboratively rescued for success in two versions, initially for China's huge and tech-receptive market, then for the global market.

After all, failing to succeed in the US doesn't have to mean those US tech entrepreneurs can't succeed iby collaborative effort with China start-ups in China as a launching platform for the world within say two years.

In other words, the 3C's of codes, cash and connections that are the hallmarks of Silicon Valley can be ported to China where American technologies which have failed to take off can be rescued without wastage, however with the proviso that the churn and burn rates be kept to a minimum during the rescue operation. Who knows, if they succeed in China, the shanghai tech Star bourse may fly higher faster and bring wealth to all developers involved so that they can invest more for the future. Can do?




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