Behind Recent Good News, Chinas Economic Prospects Look Dubious
Behind Recent Good News, Chinas Economic Prospects Look Dubious
Industrialization is the process in which a society transforms itself from a primarily agricultural society into an economy based on manufacturing. An economic collapse is a breakdown of a national, regional, or territorial economy that typically follows or spurs a time of crisis. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
- Plus, Fed Chair Powell has said that, if needed, the Fed will reverse its easy monetary policy in order to contain inflation.
- Whether China rises to No. 1 remains to be seen, but it’s clear America is facing the starkest threat to its economic dominance in decades in a rivalry that’s reshaping the world order.
- But many see risks, especially if Covid-19 proves hard to contain or consumer confidence doesn’t improve.
- Instead of distributing checks, for example, it issued shopping vouchers that needed to be redeemed.
China’s latest official statistics show the economy got off to a robust start in 2017 but economists are not sure how long the pace can be sustained. China’s Communist Party opens its 19th Congress on Wednesday with a backdrop of sluggish reforms and slowing growth. Those best able to satisfy the demands of the recovering Chinese and US economies stand to benefit. Commodity currencies might also find fresh favour as it becomes clearer that complexities in the China-US relationship will have spillover effects. Economies that have failed to control the virus so far might be able to compensate with successful vaccination programmes. Those who can catch up at this part of the race against Covid-19 can still emerge from the pandemic stronger.
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This will include people from Japan’s Ministry of Economy, Trade, and Industry and the US Department of Commerce. Rather, both sides evidently want to provide government subsidies for making changes. For example, the Biden administration will ask Congress for US$50 billion to subsidize growth of semiconductor production in the United States.
They will do this either when economies appear to be self-sustaining, when the virus is mostly suppressed, and/or when they feel that continued stimulus creates an unacceptable risk of inflation and/or financial stress. Regardless of the reason, the process of unwinding will necessarily have a negative impact on economic activity, perhaps significantly. In the United Kingdom, for example, the government already anticipates a sizable tax increase to offset the huge increase in government debt. The evidence so far is that the currently available vaccines are hugely effective against the currently known strains of the virus. However, so long as the virus has opportunities to be transmitted from one person to another, it will have opportunities to mutate in ways that might reduce the effectiveness of existing vaccines.
Data and research help us understand these challenges and set priorities, share knowledge of what works, and measure progress. In any event, the need to counter China’s rising global power now stands as an urgent prod to revitalize America’s drifting, uneven economy. Hopefully, the fear of falling behind will provide enough motivation to spur that work even in a hyper-partisan time.
Retail sales have recovered more quickly in developed economies, most notably in the U.S., which recorded annualized growth of 6.3% in February. This was a faster pace of growth than before the pandemic, when sales in February 2020 grew by 4.5%. Retail sales rose by 4.6% in December 2020 and 3.9% in January 2021, according to Ratings. That was well short of the roughly 8% growth that dominated before the pandemic hit, suggesting an impact from prolonged social distancing measures. Daily new cases of COVID-19 fell to zero in China in March 2020 with just a handful of subsequent minor outbreaks, according to the Our World in Data project at the University of Oxford. This allowed the Chinese export machine to kick into gear in response to the sudden global demand for medical equipment such as personal protective equipment.
South Korea’s KOSPI index headed for a loss of more than 1%, though Japan’s Nikkei index rose 0.7%, apparently in anticipation of stimulus measures. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website.
Observing this and being aware that a much-bigger stimulus was coming in March, businesses likely accelerated hiring in order to take advantage of the expected increase in demand. The US$1.9 trillion stimulus was signed into law on March 11 and the data from the latest employment report was accumulated during the week of March 15. Thus, there was little time for the stimulus to have a direct impact on job growth. Moreover, it is likely that businesses anticipated positive effects from mass vaccination.
The figure touched -3.5 percent in the U.S. where the potential growth rate is around 2-3 percent. A growth rate of 2.3 percent has been truly remarkable in China, which has fought well against the pandemic. That contradicts the narrative that China — considered the growth engine for the global economy this century — is leading the world’s recovery, said Shaun Roache, chief economist, Asia-Pacific at S&P Global Ratings. This has led some businesses to accelerate investment in China, redefining operations there as their main production sites.
In the April jobs report , we will likely see the impact as businesses digest a change in aggregate demand for the economy. Background explainers, news and analysis on China’s economy, including its opening up, the US-China trade war, the impact of tariffs and trade talks, growth rates and other key economic data, the Belt and Road Initiative, and Greater Bay Area plan. Still, one takeaway is the rebound could be more gradual and less V-shaped than some economists had hoped, say analysts. “China’s Q2 GDP, while could be better than Q1, should still see a negative growth year-on-year. This is partly because of the sluggish global demand caused by the virus, leading to canceled orders for many Chinese factories,” said Raymond Yeung, chief China economist at Australia & New Zealand Banking Group in Hong Kong. Another factor that complicates the recovery process is the changing dynamic in international relations.
The Coronavirus Outbreak Might Be Nearly Over In China, But Economic Hardship Is Not
The World Bank last week raised its economic growth forecast for China for 2017 to 6.7 percent from 6.5 percent. Gross Domestic Product growth must not be seen as an indicator of China’s underlying economic performance, a Beijing-based economic theorist and financial strategist has said. There are two employment reports released by the US government—one based on a survey of establishments, the other based on a survey of households. Before looking at the March establishment report, it is useful to look back at the past year in order to put things in context.
The latest PMIs suggest that manufacturing activity in the Eurozone is growing at a record pace. The Eurozone manufacturing PMI increased from 57.9 in February to 62.5 in March, a record. Moreover, although Germany was the star performer, the strong growth was consistent across the region. The PMIs were 66.6 in Germany , 64.7 in the Netherlands , 59.3 in France (a 20-year high), 59.8 in Italy (a 21-year high), and 56.9 in Spain (a 14-year high). At some point, the governments of large advanced economies will choose to scale back the monetary and fiscal stimulus that has been a major feature of this pandemic.
Chinas Growth Beats Estimates As Economy Powers Out Of Covid
Many urban workers are still clocking fewer hours and earning less than before, despite holding on to their jobs. Others, including college graduates and those who lost jobs due to Covid-19, are struggling to find opportunities with good pay. A key factor to watch, https://ednewschina.com/ economists say, is the job market, and its effect on spending. While China’s urban unemployment rate recovered quickly last year after hitting an all-time high last February, many economists believe the current rate of 5.2% understates the damage Covid-19 did.
The result of this has been the slide of whole swaths of country into stagnation, with grave implications for the nation’s economic, social, and political health. At the economic end of the equation, such unhealthy trends are wasting talent, thinning regional supply chains, and depressing communities. In social terms, the current geographic imbalance contributes to inequality because it deprives millions of workers who live in the “wrong” places from quality advanced-sector employment in the “right” places. It also remains likely that the drift of these “left-behind” places has exacerbated the nation’s political divides. What’s more, the presence of these critical industries—ranging from aerospace and chemicals to pharmaceuticals, software, and scientific research—has been dwindling in most American regions, contributing to stark regional imbalances. Fifty-eight of the nation’s 100 largest metropolitan areas have seen zero or negative employment growth in their advanced-industry sectors in the last decade, with most of those metro areas in the industrial Midwest and South.
In 2018 and 2019, the Chinese economy expanded at the rates of 6.7 percent and 6.0 percent, respectively. As the pandemic has been very well-contained in China during the winter, it is possible that the economic growth rate of China in 2021 will remain between 6 and 7 percent. China is the only economy that registered growth in a pandemic-ravaged world. The UK posted an economic growth rate of -9.9 percent in 2020, far below the potential growth rate.