China

China’s economy performed well in 2017 – and Peking will also keep growth at a high level this year

China can look on a good year for the economy in 2017: GDP growth increased slightly on the previous year to 6.9 per cent – for the first time in seven years the growth rate for the full year accelerated again. In the final quarter the growth rate remained stable on the third quarter at 6.8 per cent. The upswing firmed. The Chinese economy benefited above all increasingly from the buoyant global economy. After two very difficult years foreign trade was no longer a brake on economic growth in 2017, and in the final quarter it even made a positive contribution to growth. Admittedly, in the second half of the year economic growth failed to keep up completely with the strong momentum of the first half of the year. The boost from state investments, which initiated the upswing in 2016, has slackened off further and in the private sector investment…

Sounding the „all clear“ for China’s currency reserves

Concerns about China’s economy making a hard landing, fears of an exchange rate collapsing because of capital flight, and in its wake worries that currency reserves would be sold off – these were the ingredients that before year-end 2017 influenced the one or other outlook on China. Fortunately, we have always opted to be slightly more cautious and considered in particular the trend for currency reserves with less of a furrowed brow. The combination of economic stabilization, the globally weak USD, controls on capital flows, and other threatening gestures made by Chinese officials in the direction of the financial markets have not only brought the reduction in currency reserves to a halt, but have since even sparked a convincing reversal of the trend. Following its all-time high in July 2014 (of just short of USD 4,000 billion), China’s currency reserves had plummeted by almost USD 1,000 billion by early 2017….

Chinese growth slows minimally in the third quarter, but the outlook for the next few quarters is robust

  This morning the Chinese Statistical Office announced that China’s economy grew 6.8 per cent year on year in the third quarter. So for the first time in nearly two years growth slowed again slightly. In the second quarter a rate of 6.9 per cent was reported, and in the winter half year 2016/17 – contrary to expectations – the pace of growth even increased. But the economic growth rate that has now been reported remains above the government’s 6.5 per cent growth target for this year. So from the view point of the political leadership in Peking, the economy is “on course.” Nor does the result disappoint expectations in the market, which had anticipated that the pace of growth would slow slightly. With hindsight, only the reference made a few days ago by the head of the central bank to a growth rate of 7 per cent in the…

China “votes”: President Xi seeking second term

In Beijing, tonight European-time sees the start of a major political event: The Communist Party of China opens its Party Congress, which only takes place every five years, and with it the beginning of a new legislative period in the one-party state of China. Key appointments will be made, which is why the Congress has almost the same political significance as parliamentary elections in Western democracies. It is largely undisputed that Xi Jinping will be confirmed in the office of General Secretary of the CPC and thus as the country’s president. The decision will presumably take place toward the end of the Congress, which lasts almost a week and where the composition of the key party organs, the Politburo and the “Politburo Standing Committee”, will be newly decided. It will also be interesting to see how many loyal supporters Xi will muster and whether a potential successor is among them….

Globalisation cannot be just – but creates more prosperity

Globalisation – no other topic has been discussed as fiercely and emotionally. The debate tends to hinge on two questions: Can globalisation be just? And: Does globalisation improve our prosperity? The honest answer to the first question is: No. And the answer to the second question is: Yes. So why is that the case? The gap in prosperity between the emerging markets and the industrialised countries has significantly closed in a relatively short period of time. This trend has been driven by well above-average growth in the emerging markets. Growth was, in turn, triggered by strong wage differences and a corresponding relocation of labour-intensive processes from the industrial countries into the emerging markets, with the emerging markets’ business model being strongly export-driven and less dependent on the domestic economy. While the emerging markets got such a boost from the shift of certain work processes from the industrialised nations, this had…

China maintains the faster pace of growth in Q2 as well

In Q2 2017, China’s economy again grew by 6.9 percent on the year and has thus maintained the slightly brisker pace of growth seen at the beginning of the year. The monthly economic figures for April and May suggested that growth in the prior quarter might have slowed slightly, but in June the economy seems to have become far more zestful. These are good signs for the second half, when growth will probably maintain this momentum. In the run-up to the Communist Party of China’s (CPC) Party Congress in the autumn, which takes place only once every five years, the leadership in Beijing is, among other things, emphasising “stability”. If necessary it will also provide short-term growth stimuli to ensure that economic conditions remain favourable. The Chinese economy is at present also benefiting from the improved global economy. In recent months, foreign trade has supported growth. Given these conditions, we…

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