Other headwinds include the continuing trade war with the U.S., potential conflicts with other countries, and overall weak demand for China’s products. A different view of the Chinese economy is now surfacing with some analysts expressing skepticism about its ability to continuously grow, owing to internal problems like accumulated domestic debt caused by heavy borrowings by both private and public companies. Many businesses in China find they are getting as many customers as they did before the onset of the pandemic in 2019. The McDonald’s fast-food chain, for instance, did more business in December 2020 than it did in 2019.

In fact, China has already overtaken the U.S.if GDP is calculated on purchasing power parity terms, which adjusts exchange rates to account for price differences between countries. The list boasts 124 companies based in mainland China and Hong Kong—and 121 based in the U.S. In his first press conference since taking office, President Joe Biden vowed he won’t let China overtake the U.S., promising more spending on innovation and infrastructure to boost the American economy. Consumption spending per capita fell 4% in 2020 from a year earlier after adjusting for inflation, while investment in fixed assets such as real estate and infrastructure grew 2.9%, according to the statistics bureau.

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Thus, most of the increase in the bond yield can be attributed to an increase in expectations of inflation. Despite the bad news regarding the virus, Europe’s manufacturing sector continues to perform exceptionally well. This is according to the final purchasing managers’ indices for March released last week by IHS Markit. PMIs are forward-looking https://ednewschina.com/ indicators meant to signal the direction of activity in the manufacturing sector. They are based on sub-indices, such as output, new orders, export orders, input and output pricing, inventories, pipelines, employment, and sentiment. A reading above 50 indicates growing activity; the higher the number, the faster the growth.

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I consult on economics and investment strategy and serve as chief economist for the NY-based communications firm, Vested. I am a contributing editor for The National Interest and an affiliate of the Center for the Study of Human Capital and Economic Growth at the University at Buffalo . In my long career in finance, I have held positions as portfolio manager, director of research, and chief investment officer. My most recent book, Thirty Tomorrows, takes up the question of how economies can meet the challenge of globalization and aging demographics.

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Consequently, failure to quickly vaccinate in some countries could expose the whole world to new risks. Even a perceived risk could lead multiple governments to impose new restrictions on economic activity and travel. While the official manufacturing PMI focuses heavily on large companies and state-owned enterprises, the Caixin index is separate from the government and includes smaller private firms as well. Want Professor of Chinese Business and Economy, and a Professor of Finance and Economics, at the Columbia University Graduate School of Business and School of International and Public Affairs. His research focuses on international trade and finance, macroeconomics, and the Chinese economy.

Instead of distributing checks, for example, it issued shopping vouchers that needed to be redeemed. “China seems to have gone relatively light on economic stimulus, relying instead on an all out effort to stop the viral spread and get people back to work, factories humming,” Doug Barry, an analyst for U.S.-China Business Council said. Also, the capillarity of the Communist Party made the implementation of these strict measures easier than in other parts of the world,” Lourdes Casanova, director of Cornell’s Emerging Markets Institute, told VOA. FILE – Chinese 100 yuan banknotes are seen in a counting machine while a clerk counts them at a branch of a commercial bank in Beijing, China, March 30, 2016. Retail sales data released March 15 suggest signs of improvement as the figure jumped 33.8% year over year in the January-February period.

Since then, the initial China “shock” has evolved into an ongoing crisis exacerbated by a broader ebbing of U.S. advanced-industry competitiveness. China, for its part, has positioned itself as America’s main economic rival through an array of tactics, including unfair and illegal trade practices, intellectual property theft, manipulative terms of market access, and lavish subsidies for Chinese enterprises. Chinese brokerage firm Huatai Securities says localized outbreaks could drag economic growth down by 3 percentage points in the first quarter, though growth should still be strong compared with last year when the pandemic was first breaking out. China’s economy already is slowing amid the trade conflict with the United States, but if Washington were to ramp up tariffs even further it could cut Chinese growth sharply, the IMF warned Friday. China’s central bank said Sunday it would pump 1.2 trillion yuan ($173 billion) into the economy as it ramps up support for a nationwide fight against a deadly virus that is expected to hit growth. The world’s second-largest economy grew slightly below expectations in the July-September period, National Bureau of Statistics data showed, while it cautioned of uncertainty ahead as « the international environment is still complicated ».

chinese economy news

The total business of the postal industry reached 2.1 trillion yuan ($320 billion), 29.7 percent more than a year ago. As the Chinese economy has performed stably in 2020, China’s foreign exchange reserves also increased by $109 billion and are now at $3,216 billion. China has the largest foreign exchange reserves in the world, providing a solid support to China’s international trade. Totally 4.5 billion tonnes of goods, under the category of international trade, passed through the Chinese ports, posting an increase of 4 percent from 2019. Looking into the details, the Chinese economy shrunk by 6.8 percent in the first quarter of 2020.

Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Investors have been fretting over higher interest rates and their impact on stock valuations. Now that factories are humming again and stores have reopened, authorities are speaking more openly about the need to rein in credit and warned of the risks associated with rapidly rising debt levels. But the latest pandemic outbreaks may prompt the central bank to be cautious about tightening policies. Last year, China lost more than 5 million migrant-worker jobs, compared with a gain of 2.4 million in 2019 and around 4 million each in 2016 and 2017, when growth was stronger, according to Wind, a data provider.

  • Furthermore, the economic growth rate for the first quarter of 2021 could be very high, bringing a surprise for the market.
  • That leaves the world’s second-largest economy driving global growth and potentially passing U.S.
  • Global stocks and commodity markets sold off at an astonishing rate, triggered by fears that China could launch a prolonged currency war that would boost its own exports at the expense of those it buys from, including the U.S.
  • At the end of 2020, Chinese people owned 280 million automobiles, 19.4 million more than a year ago.
  • Chinese President Xi Jinping spoke of plans to further open up the Chinese economy this week – and the world economy should hope US president Trump feels vindicated by this.

China is the largest emitter of greenhouse gases, and its air and water pollution affects other countries. Moreover, maintaining economic growth at reasonable levels has important spillovers for the growth of the rest of the world economy. China’s rapid economic growth exceeded the pace of institutional development, and there are important institutional and reform gaps that China needs to address to ensure a high-quality and sustainable growth path.

What is more, the country’s leadership has failed to remedy the economy’s lopsided growth model as they intended more than ten years ago. This failure will make China more debt prone than it already is and further restrain growth prospects, perhaps even more severely than the demographic challenge. While the tax burden on companies remains heavy and financial support of the manufacturing sector needs strengthening urgently, a shortage of innovative and high-tech talent has also significantly constrained development of the sector, Miao added. There are many problems restricting the high-quality development of Chinese manufacturing but the most fundamental one is insufficient market-oriented reforms, Miao said. In recent years, China has become the world’s top manufacturing nation, accounting for more than a third of global output, driven by domestic demand to produce everything from motor vehicles to industrial machinery.

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Domestic consumption, while billed as the most important driver for China’s economic growth as it contributed 58% of its GDP last year, also looks sluggish. The expected “revenge shopping” sprees seem unlikely to occur as people are worried about a second wave of outbreak and the economy overall. China’s one-party state also means it can deploy measures on a much larger scale, and much faster than other political systems. Global economic forecasts have also become increasingly pessimistic in recent weeks. The International Monetary Fund said the virus could cause the worst global recession since the Great Depression in the 1930s, while the unemployment rate in the US couldreach 20% as soon as next month, according to a note from JPMorgan.