Monday, July 16, 2018

Economics: China - Don´t Trust The Headlines

(Drivebycuriosity) - If we believe the headlines then "China´s cooling economy spells trouble for global growth" ( bloomberg). This is just scaremongering. Last night we got the newest economic data from China which defy the pessimistic predictions. In the second quarter 2018 China´s GDP grew 6.7%, after 6.8%. Troublesome? Retail sales grew in June 9% (May plus 8.5%) and industrial production advanced 6% (May plus 6.8%  tradingeconomics).





The numbers prove that China still generates a solid growth and stays the growth engine of the global economy. The numbers also show that China`s consumers are getting more important and are becoming a growth engine, as they are in the US where the economy is mostly driven by consumer spending.

China is still in a transformation process: Changing from an industrial country - which relies on exports - into a modern economy like the US which is dominated by services and focuses mostly on the domestic market. For years imports & retail sales have been growing faster than exports & industrial production. Therefore a growing part of the national production is consumed in China, which reduces the country´s dependence from global markets. Thanks to the fast climbing consumer spending China can weather a trade war much better than the China haters think.

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