I think that the China pessimism is unjustified. China`s growth changed just from red-hot to strong. The economy (BNP) is still growing 6-7% annually, the mentioned fixed-asset investment is increasing 6%, retail sales are climbing more than 8% & industrial profits are soaring 16% (calendar). So what?
The China skeptics miss the big Picture. China is still in the begin of a perpetual catching up process, which is fueled by extreme income & wealth differences to the US and other Western nation. In 2017 China had about $8,827 income per capita, the US number was $59,531 (worldbank). China is following other countries which had caught up to the leading economies (to the UK before 1920, since then to the US, graph below).
The country has a huge natural resource which is fueling the perpetual growth: A gigantic amount of human capital: There live 1.3 billion people who are intelligent, work hard and save money to achieve a better life and to adapt to the living standards in the US and Europe. The Chinese economy benefits from an education system which is more rigorous, competitive and success focused than the American and the British (chinese ). Wikipedia counted in 2014 already "2,236 colleges and universities, with over 20 million students enrolled in mainland China" (wikipedia). Fast expanding knowledge is driving science & innovation and fostering economic growth (washingtonpost). Chinese corporations, think tanks & administrations can employ a large number of highly dedicated & educated people - a strong driver of economic growth (scottsumner).
China`s growth is boosted by a rapid transformation process. For decades the country has been changing from an agricultural economy into an industrial economy, following the role models of the US, Japan, South Korea and many other countries. Now China is entering another stage of the 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.
China´s catching up process also benefits from historical lessons & the experience made by other countries. China does not need to reply the mistakes of other countries and is learning from them. Beijing`s central bank is doing a good job by avoiding inflation & recessions. China´s transformation also gains from the technological progress: Rapid advances in software & Internet (including cloud computing), robotics, 3D printing, nanotechnology, genetic engineering and other technologies are all lifting the productivity of the economy (byronwien).
The Internet - including the "cloud" - increases the flow of information and reduces the cost of data. New ideas can spread faster, encouraging discoveries and inventions and boost the technological progress & China`s transformation. A large part of the population uses already smartphones, tablets and other devices which allow them permanent access to the world wide web. These high tech devices help them to organize shopping, leisure time, traveling, dating, eating out and more and are so rising productivity & economic growth. "Although China’s internet penetration is just over 50%, its sheer scale means that there are 3x the number of smartphone users and 11x the number of mobile payment users in China than in the U.S" (china-internet-report). Chinese companies are using cloud services for organizing & reducing costs. China has already huge Internet companies like Alibaba, Tencent & Baidu which are growing faster than their Western counterparts and are becoming global power houses (visual). The government - and companies like Baidu - are investing massively into artificial intelligence which is boosting the transformation process & economic growth for years to come (economist).
China´s megacities (there are at least 15 metropolises with a population of more than 10 million people wikipedia) are supporting productivity and the growth of the whole nation. History shows "that clusters of talented and ambitious people increase one another’s productivity and the productivity of the broader community, spurring economic growth" (citylab). "80% of economic output originates in cities: urbanization is the engine of economic growth" (project-syndicate). The migration to big cities fosters a fast rising affluent middle class, driving consumer spending & economic growth.
The China skeptics lament about the high debts. But they are wrong, China does not have a debt. The country is big creditor and loans money to the US which is highly indebted. China`s foreign reserve ( dollar holdings) are $3.11 Trillion! The Chinese save more than 40% of their income, the American just around 20% (worldbank). The high savings lay the ground for investments in infrastructure and other targets (capital accumulation) and are fueling the sustainable growth of China´s economy.
I get the impression that the permanent China skepticism is just a kind of racism.
PS For illustration I used an image from the China Fashion Week in Bejing 2017 displaying creations by designer Tom Dong as a symbol for China`s modernization (xinhuanet).
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