The third is foreign trade, which fell sharply in the first half because of the European Union debt crisis and vulnerable world economic recovery. As a whole, imports and exports grew just 8 percent year-on-year compared to 25.8 percent in the first half of 2011. The net export downturn was a major factor dragging down the Chinese economy.
But a modest rebound is expected once the central government's recent policy actions are gradually implemented in the second half of the year. The GDP slowdown is likely to bottom out during the third quarter, returning to 8 percent and slightly higher than 8 percent during the fourth quarter, thus taking the entire year's growth to about 8 percent. Needless to say, no recession is on the horizon, let alone a potential "crash".
China's imports grew by only 6.7 percent, slower than the 9.2 percent increase of exports in the first half. But imports from the United States grew by 7.9 percent. An empirical study of previous Chinese economic downturns and US exports to China shows American exports to China did not necessarily slow down even in "poor" years. During the global financial crisis, US exports to the world fell by 18 percent, while its exports to China fell by 0.3 percent only.
It would be wise to be cautiously optimistic about US exports to China in the second half, because data indicate they were already picking up in the second quarter.
The above statistics and the US economy's makeup belie another of the US' criticisms against China. There has been a continuous, raucous bashing of China in the US this election year amid the high jobless rate and weak economic recovery. China's trade policy has been blamed for "taking away American jobs" and thus being the main cause of US economic malaise.
But US labor data show how unfounded that accusation is. The US non-farm sector added a total of 1.78 million jobs from June 2011 to June 2012, a 1.35-percent increase. There was an increase of 1.64 percent in its goods producing sector and 1.91 percent in manufacturing. This shows the sectors producing internationally tradable products have an above average job growth rate. Jobs in the auto and spare parts sector shot up by 8.8 percent, although many have complained against fast imports of auto parts from China.
Job losses, on the other hand, occurred in information services (down 1.54 percent), and government (down 0.76 percent). At 0.35 percent, finance and insurance barely had any growth. It is worth mentioning that information service, government, finance and insurance sectors are not internationally tradable.
So the Chinese economy should be viewed as being on the cusp of a much-needed transition, not an impending crash. China's current GDP growth rate is on track to meet the target set for this year. Fixed investment in certain sectors has slowed to cool inflated sectors of the economy while still improving in others. Foreign trade will rebound once the global economy picks up and hopefully expand, given China's increased emphasis on greater domestic consumption.
The author is co-director of the China-US/EU Study Center at the China Association of International Trade.
(China Daily 07/28/2012 page5)
Charlotte and Emilie Meaud, twin sisters, were killed at the terrace of the Carillon, during the attacks on Paris, on the 13th of November.
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