Chinese economy to raise speed and help the world grow

(From right to left) Wen Jiabao, Chinese Prime Minister, Herman van Rompuy, President of the European Council and José Manuel Barroso, President of the EC at the podium. The 8th EU/China Business Summit, 20/09/2012. (EC Audiovisual Services).

(From right to left) Wen Jiabao, Chinese Prime Minister, Herman van Rompuy, President of the European Council and José Manuel Barroso, President of the EC at the podium. The 8th EU/China Business Summit, 20/09/2012. (EC Audiovisual Services).

(Click to enlarge graph)

(Click to enlarge graph)

According to the Organisation for Economic Cooperation and Development (OECD), the Chinese economy is bound to resume in strength in 2013 and attain an enviable 8.5% growth rate, after a relatively slow year in 2012, when it marked its slowest yearly GDP increase for years at 7.5%.

OECD insists however that the relative slow-down of the Chinese economy in 2012 “…reflected weak export market growth and the effect on domestic demand of government measures to cool inflationary pressures. This objective has now been achieved, including for property prices, and the authorities have started to ease the stance of macroeconomic policy. Going forward, the economy will still face external headwinds, but housing and infrastructure outlays are likely to revert to their longer-term trend.

With domestic demand gathering renewed momentum, the current account surplus is set to shrink to 2¼ per cent of GDP by 2014, compared with the peak of 10% in 2007”.This positive assessment of China by OECD is to have a benevolent effect also to the country’s main trade partners. The key point is that the Chinese authorities seem to have now relaxed their restrictive macroeconomic policies, considering that there are not any more inflationary dangers.

In this context they will support internal demand across the vast country and presumably they will direct the economy to operate with lower trade balances. In this way they are favouring China’s trade partners all over the world.As a result the large size of the Chinese economy is expected to have tangible and positive effects on global growth. Actually this is a gift by Beijing to the rest of the world and has to be fully appreciated by the country’s main trade-partners, the US and the European Union.

EU – China relations

But what is China for Europe? The answer comes very eloquently from Karel De Gucht, European Commissioner for Trade. De Gucht speaking recently in London at a China- Britain Business Council Lunch on EU China Relations said: “I know that those bonds help you achieve a shared objective – growing the European economy through trade and investment.

That kind of cooperation, based on mutual interest and pragmatism, is what I want to focus on in my remarks today. Because I think it is a good description of the kind of relationship that the European Union needs to have with all of our trade and investment partners. And it is a very good description of how we should view our relationship with China.

That relationship is already strong. The speed of its expansion over the last thirty years is nothing short of breath-taking. Our trade has grown from 4 billion euro a year in 1978 to almost 430 billion last year. Europe is now China’s largest trading partner and China our second largest.

But we have a mutual interest in making this relationship even stronger because we are both going through moments of transition.  China’s first wave of growth was driven to a great extent by the abundance of low-cost labour. But the Chinese leadership knows that new skills will be needed to avoid the middle-income trap and to facilitate the move to the next stage of economic development”.

China on the global economy

Returning to the current affairs, one should focus also on the expected positive effects on the Chinese economy from abroad during this year, with more vivid demand for its products. This global betterment is expected to help China attain this 8.5% growth rate in 2013 and 8.9% in 2014, as predicted by the OECD.

It must be stressed again however that the Chinese economy is now directed by the economic authorities to a new long-term growth path, where internal demand is to play an increasing role as a growth powerhouse, with housing and infrastructure outlays to have the prerogative in this new environment. The country’s trade partners are to profit from that.

The table published is very eloquent. It describes a very balanced economy with a slightly negative fiscal balance at -1.7% of the GDP, meant to help internal demand and a rather low (for the Chines standards) current account surplus at 2% of GDP in 2014.
China is also relaxing its controls on capital transactions. According to OECD, “further interest rate deregulation and greater freedom for long-term capital movement would support growth”.

Internal assessments

It’s not only the OECD that predicts a much better year for China in 2013. According to Lian Ping, chief economist at the Bank of Communications, who spoke recently to the country’s media, China’s economic growth rate is likely to accelerate to 8.5 percent this year from around 7.8 percent in 2012.

Lian added that, “the economy will grow briskly in 2013 if we look at the infrastructure projects fast-tracked by the government in recent months and the momentum of economic reforms”.

He went on explaining that, “the government accelerated its approvals for the construction of new highways, ports, railways and sewage networks in the second half of 2012, with investment in infrastructure projects greenlighted by the country’s top economic planner exceeding 5 trillion yuan (795 billion U.S. dollars) in the third quarter.

Speaking about overall investments the bank’s executive said he expects fixed-asset investment to increase 23 percent in 2013, compared with growth of less than 21 percent in 2012.

Incidentally it must be noted that the Bank of Communications is one of the top 5 commercial banks of the country and has an internal network of over 2,800 branches covering more than 80 major cities. It has also a strong and very old presence in Hong Kong, and has established overseas branches in New York, Tokyo, Singapore and representative offices in London and Frankfurt.

Assessing the overall prospects for the Chinese economy this year the balance is obviously positive and must be also noted that this vast country by learning to operate with fewer trade surpluses, it will help the rest of the world to overcome the present global static conjuncture.

In reality foreign companies with huge investments in China, like the German automotive firms Audi and Mercedes-Benz count a lot on the internal Chinese demand for their cars. Car sales in Europe are at the best stagnant, while the demand in China goes from one record breaking to the next. The same is true for a large number of foreign companies with a strong presence in the retail Chinese market. The list is very long and contains apart the European automotive firms, practically all the global technology pantheon and all the European luxury product names. All of them count on their internal Chinese sales in order alleviate their problems with the European recession.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Migration crisis update: What are the chances of a fair deal at this EU Summit?

A reflection of health inequity in recent epidemics

Galileo and EGNOS programmes back in orbit powered with €70 billion

Inflation down to 0.7%, unemployment up at 12.2%: Bad omens for Eurozone

The New Year 2016 will not be benevolent to Europe

Industrial producer prices on free fall and stagnant output

Cameron’s “No Brexit” campaign wins top business support as Tory front breaks

Will the outcome of the UK referendum “calm” the financial markets?

German opposition win in Lower Saxony felt all over Europe

Google’s bare truth: Europe’s Chief denies EU accusations but admits they “don’t always get it right”

Lessons from the Global Entrepreneurship Index

Conflicting statistics and bad banks haunt the Eurozone

EU Parliament: Deposit guarantee and trading platform transparency sought

Twenty days that may remold the future of Europe

JADE Generations Club 2015: Knowledge vs. competences – Do not wait for the change to happen, but make it happen

Young people demand a transparent job market: new campaign launches on international interns day

EU Parliament: The surplus countries must support growth

The EU moulds a new compromise for growth and financial sustainability

Mobile young people create the European labour market of tomorrow

The Monetary Union drives Europe into dangerous paths, CoR demands an EMU of regional content

AIESEC @ European Business Summit 2014: European Youth, Change Now Patiently

EU to Telcos: Stop Mergers and Acquisitions but please help me urgently with 5G development

Businesses succeed internationally

Intel, Almunia and 1 billion euros for unfair potatoes

EU to fail 2050 Green targets due to lack of European citizens’ engagement

MWC 2016 LIVE: Under Armour learns from “robust community of data”

Italy’s M.Renzi and Germany’s S. Gabriel veto austerity, ask EU leaders to endorse growth measures

EU security and defence industry prepares positions for ‘producers’ and ‘customers’

German stock market is not affected by the Greek debt revolution while Athens is running out of time

Who is to lose from the 6-month extension of the EU economic sanctions against Russia?

We are close yet so far…

Access to health in the developping world

Brussels Vs. Google: The €1 bn EU fine and the US response

EU: Centralised economic governance and bank supervision may lead to new crisis

Is deflation a real danger for Eurozone?

Europe’s top court hears Intel and sends € 1.06 bn antitrust fine to review

No better year for the EU’s weak chain links

Syria: Why did the US-Russia brokered ceasefire collapse? What does the duo care for?

“One Belt One Road”: Its relevance to the European Companies

The European Internet is not neutral and neither is the Commissioner

Human Resources Information Systems Specialist Trainee – 2013

Eurozone has practically entered a deflation trap

The Next Web 2014, the biggest European conference on Internet so far and the Absence of Brussels from Amsterdam

Youth platforms call on German Government to break down legal barriers for young volunteers and pupils

It’s not summer holidays what lead to the bad August of the German economy

VW diesel scandal and climate change: can increased independent car checks lead to cleaner mobility?

SMEs and micro firms sinking together with south Eurozone

The Syrian knot cannot be cut without devastating consequences

G20 LIVE: “Re-envisioning the economy to enable women to reach their full potential” live from Antalya Turkey

Greece to stay in the euro area but the cost to its people remains elusive

Pharmaceuticals conceal drug side effects with the EU’s Court blessing

EU Trust Fund for Africa: Can it be beneficial for Italy and tackle the migration crisis in the Mediterranean?

Copyright: European Union , 2017; Source: EC - Audiovisual Service; Photo: Frank Molter

EU hits deadlock on the future of glyphosate a month before deadline

UN Environment Assembly 2017: where the world convenes to #BeatPollution

JADE Team at the European Business Summit 2017

WEF Davos 2016 LIVE: “You just don’t know if the oil price will be 20$ or 100$ in the next 2-3 years!” top Harvard economist Kenneth Rogoff underscores from Davos

I’m not feeling lucky: The “Right to Be Forgotten” ruling puts Google inside a box

OECD: Mind the financial gap that lies ahead

Elections in Europe: No risks for the EU, leaders readying to face Trump-Brexit

Fostering intergenerational solidarity and cooperation through age-friendly environments: the right answer to Europe’s demographic challenge

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s