When you happen to be the second largest economy in the world – after the US – it’s a fairly safe bet that you want the rest of the world to believe that you are going to keep going for ever – and maybe become the BIGGEST economy in the world.
Fifty years ago, China was a country of peasants – scratching a living from the land. Well, OK, perhaps not quite as bad as that, but certainly a long, long way from the developed countries of the West.
Since then, how that country has come on! While you may not agree with all of their principles and while you may disagree with some of their internal political tactics – which to some Western ideas smack of overbearing interference in the lives of the country’s people, and what citizens are permitted or not permitted to do – there is no doubt that China’s technological achievements have impressed the rest of the world, which is why we have bought into so many of them. They offer amazing products, and they sell them cheap.
A Major Player
Whatever your personal opinions, there is no denying that China is a MAJOR player on the world’s stage, and is going to continue to be so for decades to come.
Apart from any other consideration, it has the largest population of any country in the world, and the standards of living of that population have gradually increased over the last thirty years. It has got to the point where Chinese billionaires are more numerous than those in any other country – with the possible exception of Russia – and have invested heavily in Western countries, where they can increase their billions still further.
So there is no doubt that Beijing wants to ensure that it remains a major player.
Which is what brings us to the question of whether it is fiddling the figures.
The performance is no doubt impressive. In 2014, the Chinese economy increased by 7.4%. The last time that figure was achieved in the US was in 1951. Between 2003 and 2007 China’s annual growth was in double digits, which last happened in the US in 1943.
Certainly it has slowed since, but no economy can keep expanding at that sort of rate forever. The forecast for this year was 7%.
What is worrying many analysts is that – despite the obvious signs of slowdown – official government figures keep coming out at – as near as dammit – 7%. The figure for last month was 6.9%, which is on course for the official figure for the year of “about” 7%. Note the word “about”. Nobody could deny that 6.9% is “about” 7%.
Slowing For Months
Yet the Chinese economy has been slowing for months, to the extent that the PBOC (Peoples Bank of China) has cut interest rates no less than six times in the last 12 months. Furthermore, the country has devalued the yuan in order to boost the economy, making imports more expensive and exports cheaper for foreign customers. Beijing has pretty much been throwing everything it has got at its’ flagging economy.
Many analysts now simply don’t believe the official government figures, with some thinking that the actual increase in the economy is more like 3% – 4%.
Certainly, that rate of increase is better than that of the US economy which is gradually increasing, yet is still sluggish.
The problem for the rest of the world, other than China itself, is worrying about whether the skeletons will come out of the closet – if, indeed, there are skeletons in the first place, as many analysts seem to think.
If there are, and they do, then hold on to your seatbelts for a very rough ride.