What lies beneath China’s financial tremors?
Published on The Straits Times, Singapore, by John Wong, Aug 29, 2015.
China’s financial fluctuations have sent world markets reeling. But fears of an imminent collapse in the Chinese economy are unfounded … //
… China’s present economic slowdown is also not just about the change in the magnitude of growth, but also the nature of its growth.
Years of hyper growth have left behind a lot of “excesses” in terms of over-production and over-capacity as well as a huge domestic debt overhang. Thus, the manufacturing sector that used to grow at double-digit rates, registered only 6 per cent growth in the first seven months of this year.
China currently has huge stocks of surplus raw materials and minerals, and this explains why it currently faces low import demand from primary-producing countries. This also explains why it is pushing hard for its One Belt, One Road project as a way to digest its industrial over-capacity.
More significantly, its growth pattern has started to shift, with growth increasingly driven by domestic consumption. This means that its future 7 per cent or so growth generates more GDP in consumer goods and services, and less in output from the heavy industry sector like iron and steel.
China’s imports of certain raw materials and minerals are set to decline further. This is bad news for some primary-export Asean countries. In short, it is not just China itself, but the world at large that also has to adjust to China’s economic slowdown.
But the story of China’s growth has been well-forecast and is by no means unexpected.
The critical thing right now is not to misinterpret the fluctuations in the yuan and stock markets, which are just corrections to overvaluations in the past, certainly not a signal that the Chinese economy is about to collapse.
(full text).
China related Links:
- Causes and consequences of China’s market crash, on The Nation.lk, Sri Lanka, Aug 29, 2015: China is sneezing, will the world catch a cold?
- China should stimulate the economy, not the stock market, on EJ insignt, by Paul Pong Po-lam, Aug 29, 2015;
- China stock collapse, why the country’s market crash is not what it seems, on The Independent.co.uk, by Ben Chu, Aug 28, 2015: the eyes of the world swivelled to China this week as the country’s stock market crashed in spectacular fashion, with a number of economic myths about China being trotted out during the past five days of financial drama …;
- China’s stockmarket – Was the crash that big? on The Economist, Aug 28, 2015;
- Situation Critical, Everything’s Starting To Crash, on Talk Markets, by Harry Dent, July 28, 2015;
- It Starts: Broad Retaliation Against China in Currency War, on this blog, Aug 22, 2015;
- Website: The World Top Incomes Database;
- Find on en.wikipedia: Thomas Piketty; /See also; /External Links; the Kuznets curve;
Other Links:
Pirate Bay founder released, re-arrested, to be sent back to Sweden, on Russia Today RT, Aug 28, 2015;
US pressured Norway to arrest & extradite Snowden, seize all devices – documents, on Russia Today RT, Aug 28, 2015: the US repeatedly asked Norway to detain and deport whistleblower Edward Snowden if he tried to enter its territory in the aftermath of his leaks on mass US global surveillance, Norwegian media revealed citing formal requests …;
La crise grecque au menu de la rentrée, dans l’Humanité.fr, par JULIA HAMLAOUI ET GÉRALD ROSSI, le 28 août 2015;
Tout le programme du café associatif pour septembre, dans SudOuest, le 28 août 2015;
Grèce: Attac secouée, mais pas démobilisée, dans l’Humanité.fr, par Cécile Rousseau, le 27 août 2015: L’université d’été d’Attac a débuté mardi soir à Marseille par un constat amer de la situation politique grecque, mais déjà des mobilisations européennes se profilent à la rentrée;
Average Canadian family spending more on taxes than basic necessities – Fraser Institute says, on National Post, by Victor Ferreira, Aug 27, 2015;
Tunisie – Conjoncture: Le taux d’inflation est revenu à 4,2 en juillet, dans Kapitalis, le 27 août 2015;
Conflict Over Water In Central Asia, on naked capitalism, by Yves Smith, Aug 27, 2015;
Canada – Basic income: just what the doctor ordered, on The Star, by Danielle Martin and Ryan Meili P, Aug 26, 2015: the surest way to improve the health of Canadians is to start prescribing healthy incomes;
Europe shouldn’t worry about migrants. It should worry about creeping fascism, on New Statesman, by Laurie Penny, Aug 14, 2015: the greatest threat to our way of life is not migration. It is that we will swallow the lie that some human lives matter less than others.