Opinion | China's economy is picking up, the media said it was finished

By Tom Fowdy

Over the past six months, or perhaps longer, the mainstream media in the West have sung from a hymn sheet of unanimous pessimism pertaining to the state of China's economy. Although China officially stated its GDP grew by 5.2% in the year 2023, the country nonetheless faced a number of challenges pertaining to an unfavorable global environment which saw its youth unemployment grow, its manufacturing struggle, and foreign investment diminish.

Because of this, reporters in the West pushed a very exaggerated narrative that China's economy was in a moribund state, was faltering, struggling, declining, you name it, and of course, all blame pertaining to it was aptly pinned on China's leadership as you might expect. There are simply too many of these articles to list and more appear every week and largely all push this concurrent narrative, but you get the general gist of it. It thus become an assumed fact amongst observers that China is facing a crisis of sorts.

However, this narrative hasn't aged well. In the month of March, a number of economic indicators were reduced which all indicated China's economy was doing better than expected. First, China's industrial output has grown faster than anticipated. Then, secondly, China's official manufacturing index showed activity expanding at 50.8, beating expectations significantly, with non-manufacturing expanding at 53 (surpassing an estimate of 51) and composite PMI at 52. The Caixin index, which evaluates more middle and private businesses, then came in at 51.1. For reference purposes, all scores above 50 constitute growth, while any score below 50 indicates contraction.

The sudden arrival of positive economic indicators strongly contradicts the mainstream media narrative that China's economy is in difficulty. With such interpretations always ignoring the broader global economic environment, perhaps deliberately, there is no doubt that a great deal of this coverage was politically motivated with the goal of attempting to undermine confidence in China, aiming to deter economic ties and foreign investment in the country. The conclusion that is always drawn from such stories is that it is China's policies that are solely responsible, and often presenting a China that is unwelcoming to foreign business, reclusive and paranoid. I can recall a BBC piece just last week that quoted someone saying China is "uninvestable", it is obvious what kind of message they seek to convey.

In reality, China's economy is not in fact struggling at all, rather Xi Jinping has deliberately changed the focus point of growth and its national development strategy. This has involved effectively ending the real estate boom in the country and plunging the property sector into a managed recession in order to end the explosion of debt while simultaneously doubling down on the development of high-end manufacturing industries. Because of this, it is true that Xi has deliberately opted for lower growth targets and has even brought China's growth down, but he deems it to be more sustainable in the process. The end of double-digit growth figures as seen in the early 2000s down to a focus of 5-6% was not because China was "running out of steam" but because such an explosive "sprint" was not seen as self-sustainable in any way.

Of course, amidst it all, we should acknowledge China has faced some challenges too, such as COVID, geopolitical tensions and supply chain shocks owing to wars, stagnation of economies in the West and a global inflation crisis, amongst other things, but this far-flung from the convenient narrative that Xi Jinping has destroyed China's rise and growth through detrimental policies. Now, as things are picking up again, we may be seeing a way out of these challenges as this new high-end manufacturing policy comes to fruition. China's export boom in electric vehicles and solar panels are seen as evidence of this.

However, this surge in exports is also attracting growing hostility from Western countries who argue this constitutes an "unfair economic practice" of market dumping achieved through subsidies, which with it comes the specter of "national security threat" stories in countries such as the US. It remains to be seen how this will be responded to in the long run, but one thing is clear and that is China's economy "isn't finished" by any stretch. It's undergoing transition and moreover, attempts to contain it on the technology front are also failing as an inseparable part of this. China will quite clearly succeed in becoming the largest exporter of high-end technology goods in the world, thus once again this opportunistic narrative of its own economic collapse or stagnation rings hollow.

The author is a well-seasoned writer and analyst with a large portfolio related to China topics, especially in the field of politics, international relations and more. He graduated with an Msc. in Chinese Studies from Oxford University in 2018.

The views do not necessarily reflect those of DotDotNews.

Read more articles by Tom Fowdy:

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