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 the ups and downs of China’s economic future. On the geopolitical front, see our new article, “CHINA 2021: THE CHINESE CENTURY” to see where the nation is heading and obstacles it will face.
CHINA TARGETS 6-PERCENT GROWTH IN 2021. China’s government has set a goal of 6-percent GDP growth in 2021 and will create 11 million urban jobs this year, Premier Li Keqiang told the country’s parliament at its 4 March annual meeting.
The goals are seen as modest. China’s economy grew more than 6 percent annually in 2017, 2018, and 2019 and sprouted 11.9 million urban jobs in 2020 amid the pandemic.
Li’s announcement jolted stock prices upward briefly before falling back on realizing the goals were not unusually ambitious.
“The Chinese economy should coast to the target growth rate,” Jeremy Stevens, China economist at Standard Bank, said to the Financial Times. “Eight percent is plausible.”
The subdued growth rates come as Chinese officials eye rising debt levels; the country’s debt-to-GDP ratio soared to 270 percent in 2020.
“The authorities are determined to de-leverage the economy and de-risk the financial system,” economist Diana Choyleva at Enodo Economics, told FT. “The coronavirus has undone the gradual but good work of the previous couple of years in pursuit of these goals.”
The parliament also approved a five-year plan emphasizing “self-reliance” in key technologies such as computer chips.
In addition, assembly members heard that authorities will further limit Hong Kong’s pro-pro-democracy movement and will hike military spending by 6.8 percent, following last year’s 6.6-percent boost.
Worsening relations with the U.S. have created “drastic changes” in China’s external security outlook, forcing a larger military budget, according to China military analyst Li Nexiong, quoted in FT.
CHINA’S EXPORT BOOM CONTINUES. China’s export volume in January and February this year exceeded that in the same period a year ago by 60.6 percent, the government’s General Administration of Customs has reported.
In February alone, exports grew by 154.9 percent year on year, a record year-over-year surge.
Economists polled by the Wall Street Journal had expected a 40-percent gain for the two-month stretch.
Imports in January and February expanded by 22.2 percent over the same two months last year, more than tripling December’s 6.5-percent growth.
China recorded a trade surplus of $103.25 billion for the two months, almost doubling economists’ prediction of $57.7 billion.
The massive difference between the 2021 and 2020 reporting periods is due to China’s economic shutdown in early 2020 amid the COVID pandemic, compared to China’s early resurgence from the freeze combined with other countries’ economic re-openings now underway.
DEFAULTS RISING AS CHINESE GOVERNMENT THROTTLES BACK SUPPORTS. China Fortune Development Land Co., which builds industrial parks, defaulted on a $530-million note due 28 February, worrying investors about the outlook for the company’s entire $9.8 billion in bonded debt, including $4.6 billion in dollar-based loans from foreign investors.
The company said it has missed payments on $1.7 billion in domestic loans and offshore bonds and is seeking “consensual resolution” with those bondholders as it tries to raise cash.
After the default, Fitch Ratings downgraded the company’s credit rating to “restricted default.”
The default placed the company among the ranks of chip-maker Tsinghua Unigroup, commodity trader Tewoo Group, and other Chinese businesses unable to pay back their loans.
TREND FORECAST: China will not let its economy collapse. While it may slow down growth, it will, like other nations, do all it can to avert a recession.
