ALICIA GARCÍA-HERRERO and ALESSIO TERZI
In less than a month, leaders from business, government, civil society, and international organizations will be heading to China for an annual meeting organized by the World Economic Forum. This year’s “Summer Davos” is expected to focus on the next frontiers for growth, and China’s economy is set to be in the spotlight. It is well known that the world’s second-largest economy is struggling to achieve the government’s desired level of growth as it confronts large capital outflows, a real-estate bubble, an incipient debt crisis, and other issues. Yet deciphering the exact state of the country’s economy is difficult. With access to official data decreasing fast, some analysts question the credibility of publicly reported GDP statistics.
Among several China-related topics expected to be discussed in Dalian, trade is likely to feature prominently, given its direct implications for the rest of the world. China’s export performance was exceptional through 2020 and 2021, when it had the excess capacity to produce for a world in lockdown. And in 2023, its reported trade surplus, at $823 billion, was more than double that of the pre-COVID era. (Although its exports actually fell somewhat since 2022, that was from a very high base).
Meanwhile, imports have remained subdued as China has substituted foreign goods for domestic production, especially manufacturing. Intuitively, this all sounds like a story of an economy with very strong foundations, making its recent sluggish macroeconomic performance look like a cyclical downturn. But the reality is quite different.
No comments:
Post a Comment