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SCMP Editorial

China’s latest trade and gross domestic product figures reflect a polarisation of its economic development. Reports of a stronger-than-expected trade performance were followed by news of lower-than-expected economic growth.
Worryingly, this shows that the Chinese economy has become even more dependent on exports while the domestic economy has not maintained growth in parallel.
Domestically, this can be expected to lead to calls for stimulus to lift consumption. Externally, it is bound to fuel debate about so-called Chinese overcapacity.
That might not be the right word for it, but the gist of the discussion is that too many resources have gone into strengthening manufacturing, particularly for export, and not enough into raising consumption, making it harder for foreign brands to sell in the Chinese market even as Chinese products become extremely competitive abroad. As a result, China exports more and more.
The overcapacity theory may be debatable but the sentiment in the West is very real. Beijing cannot simply shrug it off because, structurally speaking, the country needs to find a better balance between exports and consumption. More importantly, China also needs to consider how sustainable this imbalance is for its own balanced development.
Some scholars would argue that the economy’s structural transformation is taking place in phases. The so-called emerging – hi-tech – industry is growing fast, while traditional sectors like property and industry are still recovering from earlier overinvestment.
So, inevitably, seemingly contradictory outcomes will occur from time to time but, overall, the Chinese economy remains on the right path. In other words, polarisation – exemplified by uneven development – is part of the restructuring process.
Still, perceptions of an underlying problem would be cause for concern. Beijing needs to develop a narrative to address such concerns, especially among its major trading partners.
A key driver of exports has been the hi-tech sector, with semiconductors and products related to artificial intelligence. At the same time, imports have grown faster than the market expected. Many of these are not for consumption, however, but are semiconductor components and raw materials. This just shows that China’s position in the global supply chain has become stronger.
In that regard, Asean remains China’s biggest trade partner; China also posted its 10th consecutive quarter of increased trade with the Association of Southeast Asian Nations.


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Opinion

With better-than-expected trade figures being followed by lower-than-expected GDP growth, Beijing will have to consider how to strike a balance


With better-than-expected trade figures being followed by lower-than-expected GDP growth, Beijing will have to consider how to strike a balance.


China trade

China GDP

China exports

China

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


Column

Editorial

China’s economy on the right track despite polarised economic data

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}With better-than-expected trade figures being followed by lower-than-expected GDP growth, Beijing will have to consider how to strike a balance

With better-than-expected trade figures being followed by lower-than-expected GDP growth, Beijing will have to consider how to strike a balance