(Drivebycuriosity) - If we believe the media China is about to crash. But the reality refutes the gloomy predictions. This morning we learned that China`s economy (gross domestic product) grew 6.7% in the first quarter from a year earlier (bloomberg). Retail sales rose 10.5 % a year earlier in March and industrial production expanded 6.8%. Both numbers were better than in the January/February period before (charts below, source trading trading ).
The data show that China manages the pursued soft landing. The country is transforming from an industrial & export-focused
economy into a modern system like the US, where most of the GNP is fueled
by consumer spending. The strong retail growth - stronger than production & export - indicates that China`s transformation makes progress.
Secular Catching-Up Process
I believe that China`s economy will even get better in the coming months. The huge country is still in the begin of a secular catching-up process which is
fueled by extreme income & wealth differences to the US and other
Western nation values. Today China has about $7,500 income per capita, the US number is $54,600 (worldbank). China doesn`t have much commodities but there is
a huge amount of human capital: 1.3 billion people who are intelligent,
the Chinese work hard and save money to achieve a better life.
Wikipedia counted in 2014 already "2,236 colleges and universities, with
over 20 million students enrolled in mainland China" (wikipedia). This fast growing knowledge is driving science & innovations.
And Beijing is continuing reforms which the government had started in 2013,
including a liberation of stock trading between Hong Kong and mainland
China, and announced more investments into airports, railways and other
infrastructure.
China´s growth should be supported by the technological progress and
advances of Internet, automatization of industrial production and
3D-printing. These developments raise efficiency and productivity of
China´s economy. I think that the many official stimulating programs (lower interest
rates, billions into infrastructure and more) and cheap oil & other
commodities will generate enough tailwinds to keep China´s still exceptional
economic growth alive.
PS for illustration I chose an image of the Chinese top model Liu Wen as an example for the modern China.
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