On China’s economy, gloom and doom is all Western commentators see. They fret China’s real estate slowdown, weaker domestic data and reactive Covid measures, arguing only exports sustain growth. Now, with many fearing a global recession, they also fear these teetering — potentially unleashing the long-feared, rarely seen economic “hard landing” that extends China’s bear market. Mid-October’s delayed release of preliminary Chinese trade data only amplified Westerners’ slowing-export worries. But don’t fear. Most data don’t point to a deep global recession. Even if a shallow one comes, China’s economy has weathered worse before. It can now. Here is a comprehensive look at present realities.
Yes, Chinese real estate is weak. Yes, data do suggest slower overall domestic economic activity compared to the heady days a few years back. Chinese mainland developers’ profits fell -87% year-on-year in 2022’s first half, while commercial property sales are down -28% year-on-year. Residential sales are -30% lower. And, yes, we aren’t seeing the fast growth of years past, like 2010 and 2011, when GDP grew more than 10% per year, underpinned by retail sales surging 18% year-on-year and 17%, respectively, while industrial production jumped 13% year-on-year and 12%. Many observers were enthralled by the growth “miracle.”
