The Chinese economy is under spotlight in New Zealand recently, while the buzz claiming the collapse of China’s economy in some countries are resurgent. I fully understand New Zealand’s concerns, with China being the largest trading partner. However, the so-called Chinese economic collapse theory, as facts have proven time and again, is nothing but subjective assumption driven by politics rather than economics. I would like to add a personal note to the debate but before that, knowing a Chinese proverb could be helpful: 一叶障目，不见泰山. Literately it means, with a leaf covering your eyes, you can’t even see a huge mountain in front of you. The point here is, to make sense of Chinese economy, you can’t have your views overshadowed by trivial things. Here goes my tips: when observing the Chinese economy, look at the bigger picture with broad horizons.    

The Chinese economy has long been an integral part and the growth engine of the global economy. Therefore, when observing the Chinese economy, one should have a global view. This year the global economy has begun to improve, but the recovery remains weak. World Bank projected the world’s economy will expand just 2.1% in 2023. Meanwhile, IMF’s forecasts for developed countries and developing countries were 1.5% and 4% respectively. Against this background, China’s economy continues to recover with a growth of 5.5% year on year in the first half of 2023, adding a splash of color to the sluggish global economy. As for the full year outlook, the Chinese economy is projected to grow 5.0% or above, according to most international organizations like the World Bank. In fact, China’s growth will outpace most major economies and remain a most important engine of global economy as it has for many years.

Whether the economy is doing well or not, there are a lot of macro- and micro-economic indicators to measure, but no single model or indicator can explain everything. Therefore, when observing the Chinese economy, one should have a panoramic view. Given the sluggish global demand and volatile international environment, some of China’s economic indicators did soften, but more augured well for the trend of the country’s high-quality development. Just to name a few. In the first half of 2023, consumption contributed 77.2% of China’s growth, more than 44 percentage points higher than last year. In the first eight months, retail sales of consumer goods went up 7% on a yearly basis. On top of that, the industrial upgrading in China maintained a favorable momentum during the same period. The investment in high-tech industries increased by 11.3%; services sector retail sales grew by 19.4%; online sales of physical goods rose by 9.5%. These figures show that China has made progress in optimizing its driving forces for growth.

Some real-time, high-frequency data are valuable in short-term economic forecasts, but they may deviate from the medium- and long-term economic trends. Therefore, when observing the Chinese economy, one should have a long-term view. Over the past few decades, China’s economy has grown at an average annual rate of about 10%, 3.5 times the world average. Well, the fact is, China’s economic growth is not a straight line running at a high level, but like a wave with ups and downs. In some years the growth rate even fell to a very low level due to various factors. In other words, the success of China’s economy has not all been easy to get, but by overcoming difficulties and obstacles. The road to post-covid recovery will not be smooth either. It will be more like a “wavy” and “zigzag” process. Fortunately, the Chinese government does not shy away from problems. Rather, we address them head-on. We have an ample policy tool kit which gives us confidence that we can forestall systemic risks.

I would also like to respond to some New Zealand friends’ concerns about the spillover effects of China’s economy. Due to high global inflation, cyclical adjustments in commodity prices, changes in consumer preferences and other factors, New Zealand’s primary industry exports are under pressure, and trade between China and New Zealand has also been affected to some extent. But we must see that despite of headwinds, our bilateral trade still shows strong resilience.  

Here are some figures: For goods trade, New Zealand’s exports to China have been steady over the first six months of 2023, reaching 9.85 billion, a 0.5% increase over the same period of 2022. For trade balance, New Zealand’s trade deficit was 0.3 billion in June 2023 quarter, down from 2.9 billion in the previous quarter, while its trade surplus with China widened to 2.0 billion. This means that China contributed more than 70% to help shrink that deficit. For key products, dairy and wood exports to China grew in value for the June quarter, up by 21% and 15% respectively compared to the previous quarter. And there are good news coming. In early September, global dairy prices have risen for the first time in four months. Furthermore, all New Zealand dairy products will be fully duty-free from January 2024 under the China-NZ Free Trade Agreement, from which Kiwi dairy will be more competitive in the Chinese market. The high degree of complementarity between the two economies has not and will not change. In the medium to long run, as the two economies gradually recover, enormous potential of our economic cooperation is expected to be further released to benefit the two peoples.

In the face of changing international dynamics, the Chinese economy still enjoys strong resilience, tremendous potential, ample room for policy adjustment and great vitality. The fundamentals sustaining its long-term growth have remained strong. I trust any wise observer will not, simply because of few temporary headwinds, get stuck in pessimistic view of an economy of 18 trillion USD and a constantly growing market of 1.4 billion population.