In all the palaver about “alternative facts”, President Trump’s economic direction and the fiasco that is Brexit, it is easy to overlook other economic news. However, it is possible that “alternative facts” is not a unique US product.
The Chinese economy caused a big wobble to the global economy last year with concerns that its major stock market was over-valued, public debt was unsustainable and growth was slowing. It took global markets most of Q1 to recover from the China doubts, but the underlying questions were never satisfactorily resolved.
At the end of a turbulent year, China has posted (on the face of it) some highly encouraging growth figures which suggest that the economy grew at a rate of 6.7% for 2016 over the 2015 benchmark. Whilst by the standards of the rest of the world’s leading economies, that level of growth is remarkable, it is 0.2% lower than the 2015 figure and the “worst” growth on record since 1990 – including the worst years of the Global Financial Crisis.
Chinese growth figures are viewed with a degree of scepticism in some quarters, a position strengthened by an admission from the governor of Liaoning province, Chen Qiufa who claimed that the province had been “involved in a large-scale financial deception” between 2011 and 2014 with economic data being massaged to look better.
The economic stance of president Trump could cause China problems in 2017 with Trump insiders arguing for a rebalancing of US-China trade and the President himself accusing China of using currency manipulation to gain unfair export advantage – something that previous US administrations have stopped short of for fear of triggering a mutually harmful trade war. In 2015 US-Chinese trade was worth approximately $660 billion, but the US was on the wrong side with a trade deficit of almost $440 billion from the relationship.