As China’s growth seems to be slowing, some observers see the country amid a “severe downturn.” As they mistake China’s secular deceleration with cyclical fluctuations, they miss the rapid increase in Chinese living standards.
Amid the Christmas meltdown, the Dow Jones plunged to less than 22,000, the lowest since September 2017. Thereafter, it soared over 1,000 points; the biggest single-day point gain ever. Nevertheless, it has declined 4,000 points in two months.
It is this historical market volatility associated with the Trump administration that now overshadows world economy and China. In recent weeks, the U.S. economy has become increasingly exposed to policy mistakes and drastic market fluctuations.
In 2019, Chinese economy will have to cope with great international uncertainty and even more extraordinary market volatility.
Short-term fluctuations versus longer-term trends
Recently, New York Times reported that China was amid “a steep downturn.” Indeed, since the U.S. trade wars last spring, there has been much chatter in the West about the “China’s economic slowdown.”
Once again, the not-so-informed observers have focused on quarterly growth, at the expense of annualized growth. In this regard, 2018 was an exceptional year in China and elsewhere. In the first half, global recovery was still gaining ground. In the second half, Trump’s trade wars caused substantial collateral damage that will be felt even more in 2019, in the absence of a constructive reconciliation.
About the Author
Dr. Steinbock is an internationally recognized expert of the multipolar world economy, founder of Difference Group Ltd and has served at the India, China, and America Institute (US), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/
The original briefing was published by Chinaorg – China’s official government portal – on December 28, 2018.
