As we reported in the Geopolitical section of this Trends Journal,
as evidenced by last week’s meeting with U.S. and Chinese government officials, Beijing will not take orders or follow rules set by Washington. (See our new article, “CHINA TELLS U.S TO FU.”)
And, as we have forecast, the 20th century was the American century – the 21st century will be the Chinese century. The business of China is business; the business of America is war.
While America spent countless trillions waging and losing endless wars and enriching its military-industrial complex, China has spent its trillions advancing the nation’s businesses and building its 21st-century infrastructure. The following overview of the current economic trends further paints China’s socio-economic future.
CHINA’S ECONOMY SURGES IN FIRST QUARTER. Consumer spending, home sales, industrial production, and investment all boomed more than 30 percent in China during January and February this year, compared to the same period in 2020 when the country had closed down to stem the spread of the COVID virus, China’s National Bureau of Statistics reported last week.
Retail sales, a gauge of consumer spending, grew 38.8 percent and home sales by 143.5 percent. Industrial production rose 35.1 percent and fixed-asset investment, such as the purchase of machinery, expanded 35 percent during the two months.
Analysts had expected even stronger growth, particularly in investment in manufacturing.
CHINESE EXPORTS RISE WITH GLOBAL ECONOMIC REVIVAL. Chinese exports grew 3.5 percent in 2020’s third quarter and 14 percent in the fourth as the world’s consumer economies began to stir but factories outside of Asia lagged, according to research by data firm MDS Transmodel.
Asia’s proportion of global exports increased last year while the West’s remained stagnant or fell, the study said.
“The shift in consumer spending from travel, vacation, and entertainment to physical goods, mainly bought online, has characterized all the major western economies, especially North American countries,” Antonio Teodoro, MDS’s senior consultant, said in comments quoted by CNBC.
China remains “factory to the world,” he said.
CHINA LEADS WORLD IN WIND POWER. China added 52 gigawatts (gw) of wind energy-generating capacity in 2020, doubling the 26 gw it installed in 2019 and giving the country more wind power than any other, according to the Belgium-based Global Wind Energy Council (GWEC) trade group.
The surge in wind turbine installations was driven by a looming deadline for the end of government subsidies and exceeded the council’s forecast for China by 70 percent.
Australia, Kazakhstan, Japan, and Sri Lanka also had record installation years, GWEC figures show.
North and Latin America installed 22 gw of wind capacity last year, the GWEC reported, with North America accounting for 17 gw, about 77 percent of the total.
China now has more wind energy capacity than that of Africa, Europe, Latin America, and the Middle East combined, the council said.
East Asia accounted for about 60 percent of last year’s wind installations, up from 50 percent the year before.
The Chinese government’s support for renewable energy projects led the GWEC to revise its current forecast for the country’s wind expansion this year: instead of a major drop, the council is now forecasting only a slight decrease and expects China’s new installations to deliver more than 40 new gw this year, Liang Wanliang, the GWEC’s China director, said in comments quoted by the Financial Times.
Government policies requiring renewable energy to be integrated into existing power grids will speed the transition to renewables more powerfully than subsidies, he said.
China’s economy “needs a new kind of electrical system centered around new energy,” President Xi Jinping told a Communist Party meeting on 15 March, a comment interpreted as ensuring long-term government support for green power.
China has pledged to achieve net zero carbon emissions by 2060; swapping renewable energy for its current reliance on coal will be key to reaching that goal.
PIG AND HOG PRICES SOAR AS SWINE FLU SURGES. Piglets in China now cost almost five times what they did pre-pandemic, soaring from 20 renminbi per kg (about $6.15 per pound) to more than 93 renminbi now, equivalent to more than $27 a pound.
Prices have spiked amid an outbreak of swine flu more contagious than the one that decimated the country’s pork industry in 2009, authorities say.
Meanwhile, retail pork prices have fallen 8 percent as farmers slaughter more of their pigs to cash out before the virus makes them worthless.
The outbreak began in 2018 and peaked last year, pushing China’s pork production to a 20-year low.
Authorities are predicting a gradual recovery this year, with herds growing again, but experts warn that new strains of the virus could continue to cripple production.
Production will grow 8 to 10 percent this year, according to a forecast by Rabobank cited by the Financial Times. The bank reduced its earlier estimate of 10 to 15 percent because of mutant virus strains now emerging.
Illegal vaccines are responsible for the variations, Chinese veterinary authorities say.
In January, an executive at the New Hope Liuhe pork company said a virus variation found in more than 1,000 of its hogs is “definitely man-made.”
Chinese pig herds will need at least two years to regain their 2018 size, Wayne Johnson, a consulting veterinarian at Enable AgTech Consulting in Beijing, told the FT.
“There are signs that” Asian swine flu “is changing from deadly disease to chronic disease,” he said.
CHINA’S OIL IMPORTS DEFY U.S. EMBARGOES. China will import oil from Iran at a rate of about 918,000 barrels a day this month, its highest volume since the U.S. cast an oil embargo on Iran in 2019 to punish the country for violating an international nuclear treaty, data firm Kpler reported.
Also, about 85 percent of Venezuela’s oil exports this month – more than 14 million barrels – are slated for China, contrary to a U.S. ban on Venezuelan oil purchases after president Nicolas Maduro refused to relinquish his office after winning a 2018 election.
Reversing former President Trump’s high-pressure tactics on both countries, President Biden has offered to remove oil sanctions if Iran abides by its agreement to cease the development of nuclear weapons and if Venezuela holds a free and fair election.
The shipments indicate that neither country targeted by the bans is interested.
“If it sells one million barrels a day at current prices, Iran has no incentive to negotiate,” consultant Sara Vakhshouri of SVB International, told the Wall Street Journal.
Iranian oil traders report being approached by other Asian potential oil customers who believe the Biden administration will ease or abolish sanctions on the country, the WSJ reported.
China also is increasingly ignoring international sanctions against North Korea and is now openly smuggling forbidden items into the failed state, U.S. officials recently said, as cited by the WSJ.
