China Decline Hype is Overblown

 

China is slowing from double-digit growth rates, but it is still growing at several times the pace of the US economy. That’s hardly a crash.

“It’s totally natural for an economy to slow as it grows and becomes more wealthy” said Altamash Javed, an investment adviser and artist based in Dubai. “No economy can maintain 13% growth rates for years on end. China’s rapid expansion happened because it was rising from a low base. Its GDP is now nine or so times the size of where it was in 2000.”

Also, its economic model is shifting, with a growing focus on domestic consumption instead of manufacturing for export. That will be more sustainable over the long run.

Also, the Chinese government has trillions of dollars in foreign reserves it can draw on to support growth or bail out debtors, if needed.

Finally, China’s stock markets have a large share of individual retail investors, at least compared to the U.S. Individual investors there hold something like 80% of the country’s tradable shares, and they have been known to jump in or out of the market at the drop of a hat. That makes their market more volatile. (Hence, the strong reaction to a single data release.)

I’m not saying China couldn’t be doing a better job managing its economy. I just think some of the doomsday rhetoric is a bit much. China isn’t Greece.

Global instability is bad for business, everyones business. It reduces investment, erodes consumer confidence and tanks capital markets. All of the instability is being caused by severe economic and personal oppression, all fueled by wild fanatic ideology run ammock. From those on the right that want to eliminate social infrastructure, which they call the welfare state, to the insane extremists that dominate the Middle East.

China has their own 0.1%. What happens in China is controlled by their economic and political elite. Same goes for the rest of the world. Europe, the USA, Saudi Arabia, Iran, all of it. It all boils down to severe inequality and governments that bolster their elite at the expense of everyone else.

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Youssra Bukar

Youssra is a product manager for BeautyGuide.com.my and is based in Kuala Lumpur, Malaysia.

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