China’s Economy: Unwavering Despite The Odds

Nothing is permanent in this world except for death and taxes. We all know that. It is a reality we have learned to live with throughout time, from one generation to another. And like everything else that changes over the years, how well or poorly a country’s economy fare is likewise dependent on many factors. And one of the most bustling economies right now is that of China. It has grown considerably over the last few decades and manages to keep everything together even if the economies of other nations have suffered badly.

Basing on the nominal GDP, China is the second largest economy worldwide. And according to the International Monetary Fund, China has the largest economy in terms of purchasing power parity. Without a doubt, the Chinese have the fastest growing economy the world over. That’s not surprising at all considering how almost everything is made in China nowadays. Indeed, their economy has stood the test of time. The Chinese leaders definitely know what they are doing and other world leaders should learn from these Chinese masters.

Chinese economic data has a bad reputation for accuracy, and it’s often said to be overstated as China’s government, particularly at the provincial level, tries to burnish its reputation.

But three economists, including two from the New York Fed, say the problem may actually be the opposite — that official Chinese economic data understates performance from the world’s second-largest economy.

The Chinese are careful and meticulous people. Despite what they have achieved so far, they aren’t too full of themselves and keep on pushing themselves to their limits because they know that things can suddenly go downhill if they aren’t careful enough and put in place a good backup plan for when disaster strikes.

The findings suggest the Chinese economy is doing well. “We see that our methodology predicts Chinese [gross domestic product] growth to have been lower than official estimates before the crisis of 2008, to have experienced a shallower decline in 2008 and a stronger recovery in 2009 and 2010, and to have stabilized at a higher level after 2011,” they said.

They aren’t sure why China would understate its own performance. But they say it could be that Chinese national accounts understate the growth rate of services, which would increasingly matter as that country’s economy develops.


And as expected, the New Year has been good to the Chinese. Their economy keeps on growing while other major cities and countries continue to struggle. They must know something that the rest of the world still don’t know of.

Gross domestic product grew 6.9{6bd8f940f6982a361e9496f1e5969c0bfb864166c20f036386cfc0e4f035b3d1} from a year earlier, according to official data published Monday, hitting its fastest pace since the third quarter of 2015.

It’s an uptick from the 6.8{6bd8f940f6982a361e9496f1e5969c0bfb864166c20f036386cfc0e4f035b3d1} recorded in the fourth quarter of last year — and slightly above what some economists had been predicting.

The question is how long the momentum in China‘s heavily-indebted economy can last.

“Things are pretty strong at the moment, but it’s going to be difficult to sustain this level of growth given how reliant it is on the state, which will have to pull back at some point,” said Julian Evans-Pritchard, an economist at Capital Economics.

First-quarter growth was largely driven by high levels of government investment in infrastructure and a recovery in exports, according to Evans-Pritchard.

China’s frothy real estate market also continued to fuel growth, as authorities’ efforts to cool the sector have yet to fully kick in, analysts said.


While things are looking pretty good for China now, everything may easily turn against them because their economy is also heavily indebted. No matter how resilient their economy may be, it is possible for it to crash just like the others. However, the experts from the IMF are banking on China’s positive growth during the first quarter, sturdy financial markets and rising commodity prices to help fuel and stabilize the global economy. Likewise, the positive meeting between the Chinese and American leaders in Trump’s Mar-a-Lago has eased the worries of many about a possible conflict between the two superpowers considering Trump was open about his antagonism towards the Red Dragon of Asia.

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