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Opinion | How China's economy defied its critics again

By Tom Fowdy

Having spent the Labour Day Holiday weekend in Hong Kong, the number of tourists I seen from mainland China was astronomical. Some popular attractions, such as the Victoria Peak Tram, became very lengthy waits as lines spanned as long as one hour, where vocal Mandarin could only be heard at the absence of any Cantonese. Similarly, hotel availability was scarce, as well as restaurants bustling. At a traditional restaurant in Kowloon, I watched how entire families congregated at round spanning tables to spend time together.

It is estimated that over the course of this weekend, direct border crossings in Hong Kong amounted to 800,000. That's more than three times as many as in the Lunar New Year period back in January. Of course, this is not an exclusive phenomenon to Hong Kong itself, as tourism throughout all China in this holiday period boomed, even to the point Korean television was reporting (albeit sneeringly) that some tourists were resorting to sleeping in unusual places because hotels were booked out. After the pain of covid restrictions has ended, the Chinese tourist juggernaut is back.

It is little surprise on this note that China's economy is back in full swing, with service industries now booming again. Although the global economic climate is difficult, which has actually resulted in a small contraction of the country's manufacturing PMI due to wavering global demand, China's services are nonetheless booming and GDP is widely expected to do well this year, with most economists now forecasting it to be around the 6% mark. To some degree, this is of course "catch up" growth following a largely abysmal year in 2022 as zero-covid restrictions lingered, but it is nonetheless extremely positive for the fact China continues to one of the world's fastest growing major economies. The US on the other hand, is only expected to attain 1% growth this year, while neighbouring Taiwan is now in recession.

It is ironic that this economic reality is crystalizing after a tidal wave of western media negativity surrounding China's economy. A few weeks ago, the New York Times infamously used the word "faltering" to describe the country's economic situation. Such mainstream media "wishcasting" is the norm now, with journalists deliberately aiming to whip up uncertainty and negativity derived from ideological and political motivations, as well as the anticipation that China "must" fail of course to serve the geopolitical goals of the US. This of course stands in stark contrast to reporting on the US economy itself, which as stated is in a far worse scenario.

Although it is of course true that zero-covid policies took a toll on China's economy, and similarly there are some challenges with youth unemployment, the obsession with negativity nonetheless overshadows the reality that even in spite of the setbacks, China's economic governance has been far more prudent and competent than those governing in the west, and the results speak for themselves. After all, the US economic situation right now is the product of a disastrous monetary policy that has mixed injecting trillions of short-term stimulus into the economy, triggering large scale inflation, and then hiking up interest rates to the point growth has been strangled, triggering a contagion of bank collapses. You could only imagine the field day the media would have if this was China!

In sharp contrast, China's economy has taken few self-inflicted economic wounds. Throughout the entire covid-19 pandemic, its monetary policy was largely Conservative, precisely because the state made the choice to offset the pandemic for a long-time through zero-covid policies, as opposed to just injecting trillions into the economy and letting it be. For 2020 and 2021, this policy actually worked and delivered stable, organic economic growth while the rest of the world faltered. It was only in 2022 when new variants made the virus more transmissible that this policy became unworkable, and delivered economic damage, but even then, ground was not lost given the impact of the Ukraine war has pulled western economies down. Biden predicted on his own twitter that the US would grow faster than China that year, it didn't.

Fast forwards to 2023 and now China's economy has restored itself to full-throttle, whereas the US is stuck in a rut of its own making through short-termist, impulse led economic policies combined with geopolitical decisions which are detrimental to growth at home. The mainstream media predicted doom and gloom for Beijing again, but this downplays the sheer strength of Chinese consumer and travel habits which are unrivalled in scale throughout the entire world. Once again, the mainstream media duly underestimated the Chinese economy, which is arguably going to be the biggest driver of global growth this year. The US on the other hand, despite the ridiculously unmerited optimism the mainstream media have placed on its economy, doesn't look that great, the UK and Europe? Even worse.

 

The views do not necessarily reflect those of DotDotNews.

Read more articles by Tom Fowdy:

Opinion | Hong Kong has not lost its shine

Opinion | Yoon Seok-Yeol's reckless embrace of America

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