Many were expecting literal economic growing pains for China in 2018 for a number of reasons. First of all, as China intensifies its pivot away from traditional models of mass production and towards a model emphasising high quality goods, innovation, technology and new nationally generated patents, it was thought that the rapid economic growth widely associated with China’s previous economic model would take a hit as such things tends to happen during major transitional periods. Secondly, the combination of Donald Trump’s trade war and the negative effects that Washington’s monetary and trade policies have had on the strength of currencies in emerging markets, also looked to hit both Chinese consumer spending and more importantly, the sale of Chinese goods throughout both developing economies and in the United States.
Yet at a time of global economic uncertainty, China has defied the odds on many levels, whilst continuing to achieve success that outshines that which was targeted at the beginning of 2018. First of all, in respect of trade with the United States, China expanded its surplus to a twelve year high. In terms of overall GDP growth, China’s economy performed better than internal forecasts suggested and saw a growth rate of 6.6%. To add perspective, China’s National Bureau of Statistics (NBS) predicted an over all 6.5% growth rate in 2018, down from 6.8% in 2017. Overall, China’s economic growth in 2018 accounted for 30% of all economic growth worldwide.
Elsewhere, China’s consumers helped to boost retail sales, which ultimately rose at the rate of 9%. China’s fixed asset investment figure increased by 5.9%, whilst overall industrial output rose by 6.2%. Simultaneous to this, China has been able to keep the consumer price index under its 3% growth target whilst employment levels remained stable.
Thus, while 2019 looks to be even more of a transitional period of China’s economy than was 2018, this is seen not as a negative challenge but as a positive one as it gives China’s industrial, tech and financial sectors the chance to further refine methods which are driving China’s economy in a new and ultimately inevitable direction. As China continues to view its development through the prism of long-term thinking, optimism overall remains very high.
With some pointing to a trend of growth in China being lower than in previous decades, this corresponds to the fact that China’s economic goals remain radically different than they were when China was at an earlier stage of its industrial development. Thus, changes in decade-on-decade statistics will naturally reflect this.
Whilst China was still the 15th fastest growing economy in the world during the course of 2018, the top ten were dominated by China’s African partners for development which itself is symptomatic of the fact that China has been helping African nations to expand their own economies on a sustainable basis. Below is the full list of the top ten growing economies in the world, seven of which are in Africa:
1. Ghana – 8.3% growth
2.Ethiopia – 8.2% growth
3. India – 7.3% growth
4. Côte d’Ivoire – 7.2%
5. Djibouti – 7%
6. Cambodia – 6.9%
7. Bhutan – 6.9%
8. Senegal – 6.9%
9. Tanzanian – 6.8%
10. The Philippines – 6.7%
Thus the overall picture is deeply positive for China as the country achieved GDP growth rates which are only slightly lower than the fast growing economies of nations with vastly lower GDP’s than China’s economy. As things stand China’s economy remains the second most powerful in the world in terms of GDP and the most powerful in terms of PPP (purchasing power parity).
Beyond this, as many of the nations with the fastest overall growth are partners in China’s Belt and Road initiative, China will clearly be pleased to see these figures as China seeks to work with partners whose own prosperity increases year-on-year, thus helping to built a sustainable rules based economic order that is predicated on cooperation in pursuit of peace through prosperity, rather than one based on zero-sum competitive aims.